If you've paid attention to the business press this past year, you've no doubt heard all about the potential benefits of social software to the enterprise (improved organizational collaboration, transparency, decision-making, and innovation). Maybe you're seriously considering deploying enterprise social software and becoming a "social business." If so, you'll be in good company: organizations that outperform financially are 57% more likely to allow their people to use social and collaborative tools. We outline these benefits in our recent short paper: Social is great! So, now what?

In 2007, IBM launched an experimental internal social networking site for employees -- SocialBlue (once-upon-a-time known as Beehive) -- that was designed to blur the boundaries between professional and personal, and business and fun. The site capabilities included customizable user profiles, status messages, "friending" of people, photo and list sharing, and commenting (on profiles, photos, lists). Through interviews and quantitative analysis of usage logs, the researchers set about studying the adoption, usage, motivations, and impact of social networking in the workplace.

The results were fascinating. Within a year of launch, upwards of 30,000 employees had opted in to use the site. We all know that, on personal social networking sites such as Facebook, we tend to connect to friends and acquaintances -- the people we already know. So you might guess that employees using enterprise social software would mainly want to connect to their immediate coworkers... but you'd be wrong. Employees instead used the site to meet new colleagues and also to connect and keep up with "weak ties" -- colleagues they didn't know well or weren't in regular communication with. They hoped to strengthen these ties in case they needed to call upon those connections later.

Why were all those thousands of IBMers connecting and sharing? It turns out they were Caring, Climbing, and Campaigning:

Caring: Interviews showed that employees enjoyed connecting on a social level with their colleagues. One user explained: "[the system] helps me connect to people personally, which helps me to like these people more, which makes me want to work with them." Another explained that, with teams becoming increasingly distributed and lacking everyday, face-to-face contact, the system "added that interpersonal relationship back in."

Climbing: A subset of users deliberately used the system as a career advancement tool. Techniques included becoming a visible expert on a topic by participating in professional conversations, and also strategically "friending" upper management.

Campaigning: Some users leveraged the system as a platform for promoting and gaining support for their ideas and projects. Due to the flat, cross-divisional nature of the system, some noted that putting an idea out there might garner attention and support from an executive in a way that would be harder to achieve through traditional, hierarchical corporate channels.

Today, 400k+ IBMers continue to connect to one another and care, climb, and campaign using the IBM Connections product, which was influenced by the research work on SocialBlue.

There are two other important "C's" you'll want to carefully consider when you deploy social software to your enterprise: Capabilities and Culture.

Capabilities: The capabilities of an enterprise social networking system have a direct impact on the kind of usage you're going to see. For instance, if SocialBlue hadn't allowed commenting on others' profiles and content, much of the casual, conversational, watercooler-ish nature of the site would not have been possible.

Last week, IBM hosted several U.S. Congressmen, their support teams, and media on Capitol Hill on the theme "IBM's Smarter States: How Tech Innovations Will Impact the Future of Government."

At the event, public safety was discussed as one of the areas of opportunity. We have recently published our research into the ROI of smarter public safety.

Our research, carried out over several months last year, looked at new approaches to public safety being adopted by agencies around the world, in law enforcement, fire, EMS, and disaster response. It presents the growing evidence of tangible benefits that these new approaches are delivering. You can check out a summary of the results in the study report. You and your colleagues can also access a Benefit Estimator, which can apply the research findings to calculate the potential benefits for your own organization.

I was asked the other day to summarise what we found out from our research, beyond the results presented in the report. There is always more to say than will fit in a single report! That question got me thinking, however, because the lessons learned during this research project probably apply equally to other areas of government and indeed other industries facing rapid technological change. So, here are my top 5 lessons learned:

The move towards smarter ways of working is truly a global trend. The forces that are driving change, pressures on public budgets + growing public expectations for improved service levels, are shared by public sector organizations almost everywhere. There are a number of ways agencies are responding:

Traditional cost cutting

Radical structural changes, such as partnering with private sector organizations, or creating back office shared service centres

Investing in new smarter approaches.

There is a natural tendency to prefer this last one, as it offers the promise of cost saving & improved service levels as well as keeping control of operations. Though because investment is needed, it may be harder to secure the funds needed unless a convincing case can be made.

There is a growing body of evidence demonstrating that smarter approaches pay. Savings are typically found in three areas. Firstly through improving data quality (a single version of the truth). Secondly, improving how information is shared - helping collaboration between front line workers and with the HQ/command centre. Thirdly, significant benefits are achieved through extracting meaning from the data - to drive better resource allocation and decision making and to move to predictive and preventative approaches. Leading agencies have been seeing these benefits for a few years now - so, a solid evidence base exists.

The evidence, however, is not complete. There are some modernising initiatives we found impossible to assess based on evidence to date. For Public Safety, for example, agencies are starting to actively use social media: both to collate intelligence and to engage with the community. Anecdotal evidence suggests that using new tools to mine social data can be an efficient way to collate useful data; though, others complain about the huge volumes of noise, making it time consuming to extract anything meaningful. Others complain that it raises public expectations to yet higher levels. The truth is, it is too early to comment on the economic case as detailed case studies have yet to be published. And yet, agencies have no choice but to respond to the new technology.

Technology is driving changes in mission. Our study concentrated on new approaches to existing public safety activities (such as collating evidence, investigating and responding to incidents). But the changing technological landscape is also driving significant change in how they operate. For example, in law enforcement, criminal activity is increasingly moving on-line with a double digit year-on-year increase in cybercrime. Meanwhile many "traditional" crimes, such as property crime, are decreasing. This will have implications for resourcing - as cybercrime may best be tackled by teams operating at a national level whereas local patrols are best deployed to prevent and respond to property crime.

A broad definition of benefits is needed. When presenting the case for investing in smarter approaches, much of the focus will be on future operating efficiencies. It is particularly difficult to present business cases based solely on efficiency savings, especially as extremely quick paybacks are normally mandated by Government and the competition for project funds is intense. The case for smarter becomes unanswerable once a broader definition of benefits, based on improved outcomes is introduced - including real, measurable benefits to other stakeholders (for example, savings in court and corrections costs from lower crime levels). Other, less tangible benefits should also be part of the decision making process - although hard to quantify, they may contribute greatly to the agency's goals (for example, improving community relations).

So do these points resonate with other areas of government and other industries? and what are the implications? For example, how can we move to a more sophisticated debate on how to invest in smarter approaches that:

encompasses changes in mission rather than just automating current ways of working,

recognises that technology is not static,

highlights the broader ways in which value is generated, and

is part of a true transformation program that complements rather than competes with other initiatives.

Welcome! This is the first post in a series of articles I’ll be writing over the coming months that delve a bit deeper into some of the more interesting findings from our State of Smart research here at the IBM Center for Applied Insights. Today we’ll be discussing some of the interesting data points for the retail industry including some surprising findings about CRM.

If you’re not familiar with our State of Smart work, an overview of our research and findings can be found in our Executive Report. We surveyed over 1100 executives worldwide across 9 industries to determine their organizations’ information and analytics capabilities (we refer to these capabilities as “listen” and “anticipate”). We found that organizations with these capabilities significantly outperformed their peers: 1.6x revenue growth, 2x EBITDA growth, and 2.5x stock price appreciation over a five year period. Not bad, huh?

But this only tells part of the story. We also asked these enterprises about where they realize value from analytics and how they deploy “listen” and “anticipate” capabilities. So let’s dig into the retail data a bit deeper.

For our purposes, we’re going to refer to retailers in the top right quadrant as “Outperformers” and everybody else as “Others”. Only 29% of retailers are Outperformers. About 62% of retailers have a high level of “listen” capabilities while only 38% of retailers have a high level of “anticipate” capabilities.

What this tells us is that retailers are pretty good at “Listening” – i.e. capturing data. By and large, most retailers have done a good job of laying down an information foundation. However, a much smaller proportion of those retailers are then translating that data into actionable insights.

So we know that retailers have room to improve when it comes to leveraging the data that they capture. What other interesting insights did we uncover?

For starters, as you might expect from the high “listen” capabilities, retail Outperformers are very good at capturing different types of data. Specifically, 84% of Outperformers capture data at every customer interaction (this was the highest % across any industry we surveyed). The 'data at every customer interaction' spread between outperformers and others is 2.2x, the second highest gap among the nine industry categories.

Additionally, the 56% of the Outperformers captured unstructured data versus 35% of the Others. Essentially the Outperformers are looking beyond individual transaction data and are mining social media, weather patterns, etc to drive more robust information for applied decision making.

The Outperformers then leverage this information to drive actionable insights about their customers. For example, 84% of Outperformers (vs 38% of Others) use their information and analytics capabilities to recommend actions to customers. This can take the form of both customer facing recommendations, such as cross-selling or up-selling opportunities, or internal actions such as identifying next best actions to convert abandoned baskets or reactivate a dormant customer.

The holy grail of retailers has long been to develop deep insights about customers from a variety of data sources and then use these insights to drive actions that positively impact the customer experience and consequently improve their top and bottom line. Our data shows that the Outperformers are doing just that.

What we’ve talked about so far is fairly intuitive. However in the course of analyzing the State of Smart data we saw several things that intrigued us. For instance, found that only 36% of Outperformers vs 31% of Others realized value from customer relationship management. We expected the overall percentages to be higher and gap to be wider. The data suggest several things. First, the true value of CRM has likely not yet been realized by most retailers. Second, the outperformers haven’t yet found a way to drive the additional insights they’ve been generating into their CRM practices.

Hopefully you found this deep dive into our State of Smart retail industry data to be interesting and useful. If you're interested in calculating the potential impact that developing your "listen" and "anticipate" capabilities can have on your business, I suggest you take a quick look at our Smarter Merchandising and Smarter Shopping Experience toolsets. We've developed online calculators that let you quickly and easily get an idea of the potential economic benefits that leveraging analytics can have for your organization.

I’ll be posting more deep dive articles over the next few months. Check back next next week for a deep dive into the banking industry data. If you have any questions about this article or requests for future articles, please feel free to let me know.

If you look at the distribution matrix below, the first think you’ll notice is that 46% of the respondents
were identified as “Outperformers”.This
was the highest ratio of Outperformers of any of industry we
surveyed.Simultaneously, 33% of
respondents were identified as having low Listen and Anticipate capabilities.

What we’re seeing here is an interesting dichotomy.Simultaneously, a significant proportion of
the industry are Outperformers while a smaller yet significant proportion of
the industry has low Listen and Anticipate capabilities – without much in between. This tells us that while Banking is clearly one of the more advanced industries when it comes to data and analytics, there are still significant opportunities for improvement.

As you might expect, the Banking industry Outperformers capture quite a
bit of data.79% captured customer data at every interaction (2.1x more than the Others).Additionally 58% of the Outperformers
captured unstructured data (1.6x more than the Others).

What is that data used for?Interestingly, both Outperformers and Others
used analytics to guide the actions executive decision makers (83% and 79%
respectively).This was by far the
smallest gap in this capability between the Outperformers and Others of any
industry and suggests that this capability is “table stakes”.

However, there are several uses of data that differentiate
Outperformers from Others.First, 84% of
Outperformers provide insights to suppliers and business partners (2.4x more
than the Others).Second, the Banking
Outperformers tied for the highest percentage usage of analytics
to recommend actions to customers among the industries (87% - 1.7x more than the Others).

Finally, we saw 2 very interesting results when we asked
where Banks realized value from analytics.We found that 37% of Outperformers realized value when they used
analytics to drive workforce planning and management.This was particularly interesting because the
Outperformers were 9(!) times more likely to realize value here than the
Others.

The other interesting result was one that we haven’t found
a complete explanation for (yet!).65% of the Others vs 48% of the Outperformers realized value from analytics in regards to
risk management.This was a
counter-intuitive result, so there’s clearly something interesting going on
here.

My current theory is that this result doesn’t mean that
these Outperformers aren’t engaged in risk management activities.To the contrary, it likely means that about half of them have
other systems in place that drive their risk management activities without relying significantly on Analytics.They
may make more use of policies, procedures, limits, and executive
oversight. Or perhaps their greater use of analytics to
engage with customers, suppliers, and business partners is effectively
providing indirect risk management.

Hopefully this has provided you with some interesting
insights into the Banking industry.As
always, please feel free to leave a comment or
send me an e-mail if you have
any questions.I’d be particularly
interested in any thoughts you might have on risk management in the Banking
industry.

Welcome to another State of Smart industry deep dive.Today we’ll be taking a look at the Chemical and Petroleum industry.I’ve been looking forward to writing this post for a while now.We came across some data points when we looked at unstructured data that initially were surprising but actually make quite a bit of sense when you think about it.

That’s it for today’s discussion of the Chemical and Petroleum industry.As always, please feel free to send me an e-mail or leave a comment if you have any questions.In my next installment, we’ll take a closer look at the healthcare industry.

Just like our State of Smart research has shown that outperforming organizations listen (and anticipate), Amgen CEO Kevin Sharer shows us that listening is no less important for leaders. Interestingly enough, this was something he picked up from Sam Palmisano. Sharer points out that listening with the sole goal of understanding or comprehension, is the greatest sign of respect you can extend to others. As a leader within your organization, do you listen with the sole goal of understanding? And perhaps more importantly, does your company listen to its customers with that same mindset?

According to the 2012 Cloud Computing Survey released this month by IDG, the number one barrier to implementing cloud strategies is security. A full 70% of respondents reported being significantly worried about it. More than service interruptions and other factors – unauthorized users getting access to data strikes fear into the heart of potential cloud adopters.

However, because of their flexibility, potential cost savings and ease of use, the allure of cloud computing is undeniable. So, what to do? How can we have cloud computing platforms that inspire confidence instead of instill fear?

It all starts with education. Everyone developing a cloud-delivered service becomes, de facto, an IT architect. Users must understand the risks and responsibilities in operating on a cloud, and follow a set of best practices that they respect and incorporate into their daily routines.

Second, we have to think in a different context – it needs to be more about securing information, rather than the security of physical devices and locations. If the information is secure by its nature, it doesn’t matter where it is, or what device it is on. The data has to be encrypted and available only to those who need access to it. Putting the onus on the data owner instead of the cloud provider is a good idea. Ponemon and CA released the results of a survey in May 2011 which showed that cloud providers didn’t make security their number one concern. The majority of cloud providers believed it was their customer’s responsibility to secure the cloud, not theirs.

Finally, this leads us to the importance of knowing and trusting the cloud vendor and the country the hosting data center operates in. Depending on the location of the data center, there are possible data rights issues and disruptions caused by political unrest, infrastructure issues or natural disaster. In the end, you’re investing not only in the cloud provider, but in a country as well.

The IBM Center for Applied Insights has been working with IBM’s VP of IT Risk to develop a series of eight articles on Security Essentials for CIOs, based on IBM's own experiences. The latest, the third in the series, is about what it takes for an enterprise to develop a secure cloud computing strategy.

Ever wonder what makes one infographic hit the mark and another one miss? There's more science to it than you might think.

Information graphics – visual representations of information, data, knowledge, or concepts – have been around for millennia, and humans have long mapped data in order to organize what they see, filter out extraneous details, reveal patterns, suggest further exploration, and ultimately better understand the world around them.

"Why should we be interested in visualization? Because the human visual system is a pattern seeker of enormous power and subtlety. The eye and the visual cortex of the brain form a massively parallel processor that provides the highest-bandwidth channel into human cognitive centers. At higher levels of processing, perception and cognition are closely interrelated, which is the reason why the words ‘understanding’ and ‘seeing’ are synonymous.”
(Colin Ware, Information Visualization: Perception for Design, Academic Press, 2000)

Anyone responsible for creating infographics in order to communicate complex information effectively can benefit by taking advantage of lessons from visual perception research.

Prof. Colin Ware, of the Data Visualization Research Lab at the University of New Hampshire, explains:

“… the visual system has its own rules. We can easily see patterns presented in certain ways, but if they are presented in other ways, they become invisible. … The more general point is that when data is presented in certain ways, the patterns can be readily perceived. If we can understand how perception works, our knowledge can be translated into rules for displaying information. Following perception-based rules, we can present our data in such a way that the important and informative patterns stand out. If we disobey the rules, our data will be incomprehensible or misleading.”

One important lesson we can leverage from vision science is an understanding of which elements will prominently “pop out” of an image – thanks to a mechanism known as “pre-attentive processing.” As our brains start to process an image, massively parallel processes detect image elements that are differentiated by low-level characteristics such as form, color, motion, and spatial position. The principles of pre-attentive processing govern which visual elements grab our attention first, before we’ve even begun to consciously process the image.

Here’s a simple example to illustrate the point. Count the number of 9’s appearing in this set of digits:

This time was a lot easier and quicker, thanks to the fact that our brains process lightness pre-attentively.

Some features that are pre-attentively processed include: color (hue and intensity), form (line orientation, line length and width, size, shape, curvature), motion (flicker, direction), and spatial position (2D position, spatial grouping).

For some more pre-attentive fun, visit the demo at this site, choose a feature, and see how immediately and easily your visual system is able to process it.

Understanding what kinds of features are pre-attentively processed has important implications for visual displays. When designing for critical situations such as air traffic control, flight display, or clinical care dashboards, it’s crucial to understand how to make certain symbols or elements stand out from others so they can be interpreted and acted upon immediately.

Likewise, if you’re designing infographics, it’s also important to understand which elements will be seen at first glance – they’re your first chance to grab your reader’s attention, even before conscious processing. Using color, size, shape, orientation, and other pre-attentive attributes, you’ll need to carefully craft which are the most important elements that should “pop out” first.

But choose carefully; not every element of your infographic can stand out. Vision science tells us that pre-attentive elements become less distinct as the assortment of patterns increases. Imagine a bumblebee swarming among flies; the bee is easy to pick out. Now imagine wasps, hornets, and yellowjackets joining the swarm, and the bumblebee will get lost in the mix. So it is with an infographic: As the multitude of competing pre-attentive elements increases, their “power to pop” will be diminished.

It’s easy to say that information security leaders have it tough. The security landscape is full of conflict, confusion and uncertainty, coming from a number of different directions. Leaders have a lot to handle. If it’s not a rapidly shifting threat, it’s new technology platforms to secure including mobile, cloud and social. Almost every article I see these days is focused on the growing challenges, with titles like the “Eye of the storm”, “Into the cloud, out of the fog” and “Converging waves of pain.”

Today, the IBM Center for Applied Insights releases the results of the 2012 IBM Chief Information Security Officer Assessment. This was our first foray into examining the role of information security leaders, and how they are evolving to meet the challenging landscape. While we understand and appreciate the fact that things are difficult on the technical front, we wanted to focus on the organizational and leadership aspects of information security.

We felt that information security leadership was in the process of undergoing a transformation and wanted to test whether the role was changing based on increasing security challenges and greater attention from business leaders.

We wanted to identify best practices that could be shared across the industry – and understand if organizations were moving toward a more holistic, risk-based approach to information security.

We also wanted to know what roles collaboration, innovation and integration are playing in security organizations.

What we discovered was that only 1 in 4 security leaders have made the shift to being recognized as having strategic impact on their enterprise. Based on a self-assessment of their organizational maturity and their ability to handle a security incident, three different types of leaders emerged.

Influencers (25%) – This group sees their security organizations as progressive, ranking themselves highly in both maturity and preparedness. These security leaders have business influence and authority – a strategic voice in the enterprise.

Protectors (47%) – These security leaders recognize the importance of information security as a strategic priority. However, they lack important measurement insight and the necessary budget authority to fully transform their enterprises’ security approach.

Responders (28%) – This group remains largely in response mode, working to protect the enterprise and comply with regulations and standards but struggling to make strategic headway. They may not yet have the resources or business influence to drive significant change.

We also discovered some significant differences between the groups that show how Influencers have developed their strategic voice. Compared to Responders, Influencers are:

2x more likely to have a dedicated CISO

2.5x more likely to have a security or risk committee

3x more likely to have information security as a board topic

2x more likely to use a standard set of security metrics to track their progress

4x more likely to be focused on improving enterprise-wide communication and collaboration over the next two years

2x more likely to be focused on providing education and security awareness over the next two years

This is just the beginning of our conversation around the role of information security leadership and its place within the enterprise. The full report goes into more detail on the security landscape, the different types of leaders and their characteristics, and a way forward for everyone.

As you can see, Healthcare has a distribution of 31% Outperformers and 69% Others. Overall, that breakout is similar to many other industries – with one exception. 19% of respondents identified that they had a high Anticipate capability with a low Listen capability.

This is unusual as typically most organizations will develop strong Listen capabilities before investing in Anticipate capabilities. The majority of healthcare organizations we surveyed followed this more typical model, but the higher number of outliers here suggests a couple of things: 1) Healthcare firms recognize the benefits of applying analytics to data in order to develop insights and 2) they could be dealing with an overwhelming amount of patient data that limits their ability to listen effectively.

Most Important Issues over the next 3 years:

We also saw something a bit different when we asked healthcare organizations about their most important issues over the next 3 years. Most other industries are focused on technical, economic or organizational challenges. Healthcare firms are clearly most focused on patient safety. It was selected as a top issue by 55% of respondents, with the next highest issue, compliance, only being selected by 37% of respondents. We also saw that an often talked about topic, cost control landed in 5th place with 28% of respondents selecting it.

Digging a little bit deeper into the data, we found that the vast majority of healthcare Outperformers collected data at every customer interaction (82%) and were 1.7x more likely to do so than the Others. This was the 2nd highest overall percentage behind retailers.

However, when we asked about their ability to capture unstructured data, we saw that healthcare organizations are struggling. Only 45% of the Outperformers captured unstructured data (2nd lowest overall) compared with 30% of the Others. This lends at least some credence to the theory mentioned above that some healthcare organizations may be struggling to keep up with the volume of data that is now available to them.

Also supporting the theory that healthcare organizations are embracing the value of analytics, when we asked who they shared insights with, we saw some of the highest numbers of any industry.

82% of Outperformers (vs 44% of Others) use insights to guide the actions of executive decision makers. 87% of Outperformers (vs 33% of Others) share insights with suppliers and business partners. 87% of Outperformers (vs 54% of Others) used analytics to recommend actions to patients. The Outperformer numbers were some of the highest of any industry and are all very logical ways for healthcare organizations to leverage insights from analytics.

This same theme continues when we look at where healthcare organizations realize value from analytics. 60% of Outperformers (vs 42% of Others) realize value when it comes to Patient Relationship Management. 48% of Outperformers (vs 33% of Others) realize value from Workforce Planning and Optimization. Again, these were all large percentages compared to other industries.

We did however see that there was a gap when it came to collaborating and sharing knowledge. Only 18% of Outperformers were realizing value here. That said, the overall numbers across industries were low for collaboration and sharing, but with analytics providing such strong value in a number of areas for healthcare organizations it seems logical that a possible next step would be to build better collaboration and sharing capabilities. After all, if nobody knows about an insight that’s been developed regarding a patient, drug, procedure, etc, it can’t add significant value.

Overall the data we see from healthcare organizations suggests that Outperformers are truly leveraging their Anticipate capabilities to drive value for the organization and for patients. That said, there’s still opportunity to add value by continuing to develop the Listening capability while making sure that insights and knowledge can be shared across the organization.

The CAI team have spent some time recently musing on the meaning of “thought leadership” – how do you define it and what makes good thought leadership. These may seem like obvious questions but, in my experience, as the amount of content multiplies (web commentary, blogs, social media, and so on), many people are unclear about what is distinctive about thought leadership. Our discussion highlighted some interesting points.

Firstly, there is a hazy line between thought leadership and marketing material. Thought leadership uses fact-based research to analyze a topical client issue and uses this to propose client action. Marketing material, on the other hand, uses assertion to argue the case for a supplier’s products and services. Both have their place. A potential customer would expect to find detail of products and services when accessing suppliers’ websites and point-of-view documents can provide a persuasive case to buy. Effective thought leadership, though, can offer something a little different. It can entice a potential client in, change their perspective on an issue, and increase their levels of trust and confidence in their supplier. It is for this reason that thought leadership features so prominently on the websites of all major IT systems & service providers.

So what makes effective thought leadership? I recently carried out a scan of a number of IT providers websites and the quality varies hugely. The best included several thought provoking articles which were easily accessible, thoroughly researched, and well presented. They made a compelling case for actions which clearly aligned closely with the strategic direction of the supplier. The worst were short opinion pieces which demonstrated a poor appreciation of market dynamics. In determining what makes effective thought leadership I use four categories (borrowing considerably from the analysis carried out by source for consulting.com):

Credible research: This means sufficient depth and breadth of data collection (perhaps using a customer survey) plus analysis which has rigour, yet can be understood by the reader.

Client appeal: It must draw the client in – to pick up the report/article and to carry on reading. To do this it must tackle an issue of immediate client interest and be written from the clients’ point of view, offering practical recommendations and demonstrating outcomes.

Distinctive: It must say something new, different which makes a difference (i.e. it qualifies as newsworthy).

Effective messaging: It must draw the reader almost subliminally to a set of messages which are aligned to the suppliers’ agenda. It this is done too obviously, the research and analysis loses credibility.

These are important things to remember as we work on crafting our own thought leadership. Our discussion then moved on to the characteristics of effective thought leaders – suggested role models ranged from the journalist & populariser of concepts Malcolm Gladwell to the UK-based wit Stephen Fry, with 4 million Twitter followers. Perhaps we can explore this subject on another post.

Some things are bad to do by committee, creating a work of art, cooking dinner, closing a baseball game – and sometimes committees are a necessity. Security and risk committees are an essential part of any enterprise’s security and risk management infrastructure. They are a sign of a mature organization. By promoting collaboration across the enterprise and making security and the associated risk discussions an integral part of senior leadership’s responsibilities, the enterprise can be better protected. Yet, even though the benefits are clear, not enough enterprises have one.

A study released last week by the Carnegie Mellon CyLab, looking at privacy and security governance in the Forbes Global 2000, reported that boards and senior leadership still are not exercising appropriate governance over the privacy and security of their digital assets. The study stated that there is still a significant gap in understanding around the fact that security, privacy and IT risk are all a part of enterprise risk management.

The study did note one encouraging sign – that more and more enterprises have cross-functional privacy/security committees – 70% of 2012 respondents versus 17% in 2008. These committees can act as a bridge to boards and senior leadership and elevate the discussion around security and risk, potentially closing the governance gap.

These findings line up very nicely with what we recently uncovered as part of our 2012 CISO Assessment. Overall, only 49% of the total sample reported that they had a security or risk committee. When we delved deeper, 68% of the most mature group of organizations, Influencers, had a security/risk committee. In comparison, only 26% of the least confident and mature group, Responders, had one.

What was interesting was, regardless of the organization’s overall security maturity level, if they had a security or risk committee they shared similar characteristics. In general, leaders of the committees tended to be Senior IT Executives (28%), CISOs (24%) or Senior Business Executives (22%). These committees met on a fairly regular basis, with 48% meeting quarterly and 27% meeting monthly.

The security and risk committees also took a comprehensive, enterprise-wide approach with both business and IT representation. From the business side, the most represented functions included Compliance (80%), Legal (65%), Business Executives (64%), Business Operations (64%), and Finance (59%). From the IT side, IT Executives (91%), IT Operations (72%), Network Operations (60%), and Data Governance (51%) were all a part of a majority of the committees.

Finally, as part of the CISO Assessment we looked at the primary objectives of the security/risk committees. Looking at the chart below we can see that, based on their top two choices, most committees were primarily focused on developing enterprise security strategy and developing action plans and recommendations. So should committees only be focused on strategic policy and governance issues? Is there more they could be doing?

At IBM, our risk management team meets quarterly with a top advisory committee, including senior vice presidents of all the business units, who report directly to the CEO. These include the leaders of many functional areas including finance, marketing, technology and others. Each of these executives must understand the security risks to his or her unit and what controls are in place. Together, they shape and decide strategy. Security, after all, is intimately tied not only to their units, but to the future of the enterprise.

Based on all this information, I think that enterprises are using security and risk committees more and more and they are adopting best practices around the leaders, members, operations, and goals of those committees. To make the next step:

Make sure your committee has both technical and business leadership representation and make sure it is connected to the highest levels of the enterprise and the board. The committee can be the gateway between the enterprise and the board with respect to information risk management.

Ensure your committee is broad and diverse. Compliance, legal, finance and IT operations representation is expected. Reach further, make sure business unit leaders are involved so new products and services are created in a secure fashion. Include human resources to help with employee education initiatives.

Set up a way to measure the progress of the committee. Using targeted metrics can help focus not only the committee, but the entire security organization for the enterprise. It will provide something to work towards and make it easier to communicate with the board.

IBM Center for Applied Insights (CAI) has recently started a new program on building fact-based, market-centric thought leadership assets on various facets of mobile money.

As I dig deeper to understand the current state and evolving trends of this segment, some facts are worth noticing: Consultative Group to Assist the Poor. (CGAP) estimates that around 3.5 billion people worldwide currently lack access to formal financial services. It estimates that there will be 1.7 billion unbanked customers with mobile phones by 2012. There are more than 165 pilots in the mobile money segment in emerging economies being run by a diverse group of organizations.

However, very few mobile money deployments have been able to achieve scale and gain significant customer base. Some deployments which have been able to achieve significant scale include M-Pesa in Kenya, GCASH and Smart Money in Philippines, Vodacom in Tanzania, and MTN Uganda.

Hence, there is definitely a huge potential to achieve scale in this segment, especially in the emerging markets, and firms are investing hard to address this market. However, many of them are still struggling to fully tap into this opportunity. Cracking the code for high customer adoption and usage, in quantity and continuity, appears to be an Achilles’ heel for the Mobile Network Operators (MNOs), financial institutions, and other organizations trying to venture into this segment.

So, what insights can we learn from those who have succeeded in this segment? I researched to determine some common factors which seem to have made some deployments more successful than others. It seems that there are two broad factors which can prove to be very critical for an organization while trying to launch and subsequently scale: the actual product and an effective agent network. Today, we’ll take a look at the impact of the product.

Product– Building a strong, robust and compelling product offering (and later a product portfolio) is a very important factor which is sometimes overlooked as many companies try to emulate successful offerings and solutions from other deployments.

Some of the key points to keep in mind are:

Company’s vision and long term strategy – Most of the successful companies have a well-defined long term vision and strategy with respect to offering mobile money services. For instance, a company can aspire to be the leading low cost provider for person-to-person transfer services or it can aspire to be a leading service provider in the retail payments segment. A clear vision also helps senior management develop a long term commitment to the service. This often takes substantial initial funding towards mobile money deployments and at least three to five years to become profitable.

Specific needs of the market – A clear and articulated value proposition, in terms of addressing the ‘market specific’ needs for mobile money, goes a long way towards ensuring success of the deployment. There is no ‘One size fits all’ business model or offering which can cater to different markets in the emerging or the developed economies. For example, M-Pesa has gained its popularity and scale by uniquely positioning the product to address the remittance need of the Kenyan population; its value proposition being: “send money home.” WIZZIT in South Africa focuses on “live life anywhere” by addressing the mobile banking needs of their consumers. Other avenues can be business-to-business payments, bill pay, salary payments, and so on. In the planning phase, a thorough market research can help develop a deep understanding of consumer’s pain points in the specific market which can be addressed effectively by the mobile money deployment.

Product/Concept awareness – The bulk of potential consumers in the emerging markets are from the informal economy, people who are unbanked and use other formal and informal means such as post offices, banks, or personal networks for money transfer. This target segment is mostly unaware of the potential for and features of newly launched mobile money offerings. They also have security apprehensions associated with mobile money transfers and lack of initial technology understanding. For example, some of my colleagues were initially worried about security of their payments while using newly launched mobile payments services by BharatiAirtel. Hence, a concerted and targeted marketing campaign goes a long way in addressing the apprehensions of the target segment.

Essential Features –This target customer base from the informal segment in emerging economies wants the service to be Fast (Instant transfer of money over long distance and without any queues), Inexpensive (in comparison to costlier credit/debit cards or informal payment methods), Safe (Holding value and making payments that is safer than holding and transacting cash) and Accessible (able to cash out, make purchases, and receive money in remote areas). For example, as per a white paper by IBM, cost of sending 1000 Ksh ($13.06) through M-Pesa is $0.38 which is cheaper than any other service available in Kenya such as PostaPay and Bus Company.

Right Partnerships – Research suggests that making the right partnerships at the right time helps a) align the business and its new/existing products with the overall vision on an ongoing basis, b) continuously learn and address the needs, challenges and new demands of the market and c) expand and reach scale. The partnerships can be with technology partners, banks and financial institutions, MNOs, agent networks, retail chains and other corporate organizations.

For example, Bank Bradesco and the Post Office in Brazil have partnered to create Banco Brazil. The partnership has been able to effectively attract rural populations boosting the business of both companies. Another interesting partnership is in Japan, a developed economy. Sony partnered with DoCoMo, a MNO, to form a joint venture – FeliCa Networks. They produced both the mobile phone chip and card reader which enable them to manage downloads and applications for consumers and merchants and gain a strong foothold in the mobile payment market.

There is a lot to be learned and written on the effective management of agent networks. The agent network is the effective face of the company for consumers. I can try to explore this factor in more detail in one of my subsequent posts. Look forward to your comments and observations.

It is well known that social media holds a great deal of promise for the enterprise, but many executives and others are still struggling to get over the potential security and privacy risks. So, what is the best way to make the transition to becoming a secure social enterprise?

There are a lot of potential benefits to extensively using social media within and outside of your organization. It can increase connections with clients and customers, creating deeper relationships. Internally, it can improve collaboration, productivity, flexibility and accelerate innovation propagation within the enterprise. Social media even has the potential to break down hierarchies, creating more a more collegial working environment.

However, all of this newfound openness and transparency can create significant struggles and security concerns. What happens if my personal and professional social media accounts get entangled? How can I encourage an open dialogue with my customers without leaking product and strategy details? How can I balance my conversations with clients – open enough to be valuable, without seeming like I am controlling it too much? What are the best ways to approach approvals and checks before posting, without sacrificing immediacy?

These worries are not unfounded. Earlier this month, LinkedIn reportedthat hackers breached their servers and leaked 6.5 million user passwords. Not all of them were decoded, but a number were published. In the latest IBM X-Force annual report it was noted that in 2011 there was a significant increase in phishing mails impersonating social media sites and attackers are using personal and professional information from social media to improve their pre-attack intelligence gathering.

We have recently published a couple of resources on using social media responsibly and securely. IBM recently launched our “Go Social. Stay Safe. Be Smart”program externally.

We also just published a new article, as part of our Security Essentials for CIOs series, on navigating the risks and rewards of social media. In the article, we outline four steps for a better enterprise approach to social media, plus some tips for employees using social media.

Define your social agenda – What do you want from social media? Who should be involved? What types of benefits do you expect?

Analyze the risks – Use a structured way to look at potential internal and external risks. Come up with standard procedures for when things go wrong.

Create and communicate your policy – Design an education program to communicate the opportunities and risks of social media, and what is expected from employees.

Monitor security and measure progress – How effective is the use social media for the enterprise? Is it driving more business? Is it really improving collaboration?

In this post, I will explore some interesting facets of the mobile money market in India such as market opportunity, regulatory environment, market participants, and the way ahead for the market.

Market Opportunity: The Indian economy has shown strong growth in the recent years, making it a USD 1.3 trillion economy. It is predominantly a cash economy with more than 65% of all retail transactions (total transactions are estimated as USD 410 billion per year) being conducted in cash. According to Reserve Bank of India(RBI), the central bank of India, more than 57% of the electronic transactions happen through credit and debit cards and the rest through Electronic Clearing Service (ECS) and Funds Transfer.

In India, 40% of the population remains unbanked. In contrast, it is estimated that more than 70% of the 1.17 billion people in India own a mobile phone. Moreover, this subscriber base has been increasing by 20 million customers per quarter. Hence, with a huge mobile subscriber base and a very small percentage of the transactions taking place over mobile, the potential for mobile money to take off and replace cash is immense.

Regulatory Environment: Government and the Reserve Bank of India are the nodal agencies which formulate regulations pertaining to mobile money. The Indian regulatory system has been gradually allowing the expansion of new products and solutions aimed to take advantage of the vast opportunities in this space.

RBI recognizes that individual banks need to work in conjunction with operators, mobile devices and payment technologies. In 2009, it mandated that a bank account is needed to send money but in 2010, it allowed ‘Other Persons’ (non-banks/NBFCs) to issue m-based semi-closed instruments with certain conditions and caps on transfer amounts. As a result, banks started offering mobile banking services. Further in 2010, it allowed semi-closed instruments to be used for bill payments and ticketing services, also, and permitted issue of co-branded instruments.

In late 2010, an interbank system had been set up in India enabling instant money transfers between bank accounts via mobile phones. NPCI's Interbank Mobile Payment Services (IMPS) is India's first instant fund transfer facility in the retail payment sector. It provides an inter-operable infrastructure for the banks and facilitates real time money transfer facility to their customers through the mobile channel. The unique feature of this system is that banks can choose any mobile banking application of their choice. Interestingly, IMPS can be made available in all forms (SMS, USSD, thin client, thick client) and hence it can support the transactions directly from low end mobiles to high end mobiles.

Market Participants: As compared to mobile money deployments in other emerging economies like Kenya, Philippines and Uganda, the Indian market is at a very nascent stage in terms of market consolidation and volume of transactions. The Indian telecom market is quite fragmented with fifteen different mobile operators providing service to more than 900 million subscribers. Among them, BhartiAirtel, Reliance Communications and Vodafone together hold more than 50% of market share.

BhartiAirtel has recently launched its mobile money services across India, offering services like payment of utility bills, mobile recharges, purchase at retail outlets, person to person money transfer, etc. Only Airtel customers can use this service and transfer money to other customers on Airtel.

My Mobile Payments Ltd (MMPL), a mobile payment service provider, had recently announced the launch of ‘Money-on-Mobile’ (MOM). It is a M-Wallet service which permits a mobile phone subscriber to purchase a wide range of goods and services using the mobile phone instead of paying by cash, cheque, debit or credit cards. It offers services like mobile recharge, utility bill payments, purchase of bus and movie tickets, to name a few. It claims to be India's first operator and bank agnostic mobile payment system.

The way ahead: As outlined in my earlier post, though the opportunity is huge and growing, companies need to address security apprehensions associated with mobile payments and build the awareness of the technology and the product.

India’s unique demography is an important factor to consider while taking strategic and marketing decisions during the ‘launch’ and ‘scale’ phases of mobile money deployments. Some of the notable factors are:

It is estimated that 60% of the 1.17 billion population lives in rural areas most of which suffer from a lack of basic infrastructure and education. Companies generally face significant challenges in building the infrastructure and consumer awareness in these areas.

Also, more than 50% of the Indian population is below the age of 25 years. This segment of population embraces new technology more readily but at the same time, it is a lot more value conscious and has little loyalty to a brand.

The internal remittance market – The internal migrant population is estimated to be around 100 million people. This market for internal remittance is estimated to be around USD 8 billion to USD 12 billion.

Government payments market – Government of India offers a number of subsidy and support programs like Mahatma Gandhi National Rural Employee Guarantee Act (MG-NREGA), fuel subsidy, fertilizer subsidy and public distribution system which is estimated to be around USD 40 billion. A lot of it is wasted due to leakages and fraud in the distribution system. To ensure that the intended recipients do get their payments,mobile payments can play a very crucial role. The Indian government’s ‘Aadhar’ program to provide a unique identification number to every citizen of India would further lend support to the rapid uptake of financial services and transactions over mobile.

I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

In this post, I shall try to have a closer look at some of the important questions pertaining to interoperability: what do we mean by mobile money interoperability, what are the arguments for and against interoperability, and what practical steps can be taken to achieve it?

The mobile money industry has witnessed a remarkable activity in the recent years. There are more than 165 pilots in the mobile money segment in emerging economies, mostly being run by MNOs, banks and other financial institutions. It is now possible to find two or more deployments in many Sub-Saharan African and South Asian countries. Yet, only a very few of these deployments have been able to achieve significant scale. In a recent survey of 52 mobile money service providers, the GSM (Groupe Spéciale Mobile) Association identified 11 service providers that have more than 1 million registered customers. This has led many to make a case for implementation of interoperability in mobile money ecosystems so that customers are more inclined to use mobile money and the deployments can achieve scale by increased customer adoption. Let’s try to explore this important concept further.

Defining mobile money interoperability: Interoperability occurs if different systems are technically able to work together. For mobile money, interoperability can happen between handsets, networks, financial processes and retail processes etc. The Consultative Group to Assist the Poor. (CGAP) has proposed a framework that categorizes interoperability in three levels: platform, customer, and agent levels.

Platform level interoperability – It permits customers of provider A to make payments to customers of provider B. They may also transact via any mobile network operator channel and switch operators without having to switch banks. For example, M-PESA allows consumers to send money to any phone. In South Africa, MTN offers subscribers not only MTN Banking’s application but also access to their First National Bank, ABSA, Standard Bank and NedBank accounts. WIZZIT works across all mobile networks in South Africa.

Agent level interoperability - It permits agents of one mobile money service to also serve customers of another service, in other words, agents having non-exclusive partnership with operators.

Customer level interoperability - It permits the customers to access different mobile money operators from one SIM. Also, it permits the customers to access mobile money account from same handset, regardless of SIM

The debate around interoperability: Market participants and regulators have not reached a consensus about the need and benefits of interoperability. Some regulators believe that interoperability is the way to go as the market matures and operators try to scale up. For example, governments of Ghana and India have mandated interoperability in their countries. Some regulators have taken a neutral position and have allowed market forces to decide the course. The Bank of Zambia prefers, but has not mandated, that mobile money solutions be interoperable. It is encouraging interoperability through the development of a national switch. Others feel that interoperability will erode the competitive advantage of market leaders and its implementation may not result in sufficient addition in subscribers to justify the investment required. For example, a report by GSM (Groupe Spéciale Mobile) Association suggests that the business case for implementing interoperability is unlikely to justify the initial investments of implementing it.

How to achieve interoperability: Though industry leaders seem to agree that interoperability is a key issue, they have different views on how it can be achieved. There are two broad approaches to achieving interoperability:

Standards – In global mobile telecommunications industry, Global System for Mobile Communications (GSM) has played a key role in setting up the standards and allowing the users to roam freely across various markets. Another example of common standards aiding the development of industry relates to SMS, where standard development in Europe led to a huge growth in SMS usage. Mobile money industry is still in its early stages and has not agreed to a set of common standards across all the elements described above. I believe it is unrealistic to take an entirely standards-based approach to interoperability. Standards are consensus based and take a long time to develop. Since a number of standards exist, it is unclear whether common standards can also impede the fast growth of mobile money industry; some of the players would have to wait before launching their services and many might have to migrate to common standards with significant costs and time. As the industry develops, a flexible approach based on experimentation would be needed. It will take time but governments & industry players should do what they can to monitor & promote standards,without holding back growth.

Bilateral Agreements – Bilateral agreements, both commercial and technical, have become quite common. To develop compelling product offerings and to scale up, the market participants are experimenting with various business models and forging partnerships with other MNOs and financial institutions. For example, MasterCard and Telefonica announced a joint venture using the MasterCard Mobile Payments Gateway to lead the development of mobile financial solutions in 12 countries within Latin America where Telefonica’s Movistar® brand is present.

With respect to the timing and extent of interoperability, maybe the real answer lies somewhere in between. The timing and extent of interoperability needs to be specific to the state of market and needs to be continuously assessed. A report by Mobile Money for the Unbanked (MMU), suggests some valuable recommendations:

Regulators should carefully consider the costs and benefits of implementing interoperability at an early stage of market development.

Even when the enabling regulatory framework is in place, market should be monitored on a continuous basis to assess the need of further intervention.

In the absence of interoperability regulations, monopolies and competition should be assessed periodically.

Regulations should focus on ensuring that interoperability remains feasible at low cost to provide appropriate incentive to service providers and benefit users.

Have you ever been blocked by interoperability issues? What steps are your companies taking? I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

Today, I’m going to take a different approach to, hopefully, give you a glimpse into how mobile money can change users’ experiences. This is an imaginative piece (all characters are fictitious) where I’ll try to highlight the concerns, joys and satisfaction of a mobile money user from the hinterlands of India in the year 2015. It highlights the importance of an effective and trained agent network, importance of sufficient face-time for new customers, interoperability issues, and benefits of mobile money for a typical user.

“

Today, I woke up late at 5 am, startled to already be a half hour behind schedule. My mobile phone in hand, I kept checking the time and rushed to get ready. I can’t afford to lose half a day’s wage, US$6, if I report late to work even by half an hour.

At work, Sultan, one of my best friends, asked me for a loan of US$15 which he needed to pay the school fees of his daughter. I checked my Airtel mobile money wallet balance and instantly transferred the amount to his mobile money wallet. For a nominal fee of 10 cents, it was worthwhile to help a friend.

Thinking back, I remember the last time I loaned Sultan US$10. I had to walk down 2 Kms to the nearest branch of State Bank of India to transfer money to his account. That was when we met Harpreet, the sales agent of BharatiAirtel mobile money services at the bank. He introduced us to the new mobile money services. Until then, I had a basic feature phone and could not understand much of technology or features of mobile money in the first go. Harpreet was patient; he explained the service, its features, its tie up with banks, charges and benefits for us for about 30 minutes. I was particularly wary of the notion of holding money in mobile – how secure could it be? What if I lose my phone/SIM or someone else makes use of PIN delivered to me? Harpreet demonstrated everything and explained it in detail to clear our apprehensions. This convinced both of us, me and Sultan, to subscribe to the service on our Airtel SIMs. He even gave us the contact details of two local agents in our locality who can help us cash-in and cash-out, as required.

The first few days in using this service were difficult. I forgot some of the steps of using various services; user interface of the application was not so convenient, etc. I remember approaching the local agent and was so relieved to see that he could help. He was very well trained and he helped me from time to time in using the services more efficiently. One challenge I faced in the beginning was that the agent used to run out of cash. This was a major let down for me and I had to walk a Km to get cash from another agent. Over the last two months, though, I feel the service has improved a lot.

Since then, I have been using this service quite frequently. I have used it to make recharges on my cell phone, make and receive money transfers to/from my friends, send money to my family, check bank account balance, withdraw and deposit cash at the agent and even pay my electricity bill. The list keeps on getting longer! Here again, the agent is proactive enough to let me know of the new services and discounts offered by the service providers.

For me, it’s a hand to mouth situation, given my meagre salary. I work in New Delhi but my family lives in a distant village in Orissa, more than 1000Kms from my place. With this service, I can transfer money to them on a real time basis and with minimal charges. Earlier, I used to transfer money through post office or hand it over to someone who would be travelling to my place. It took a few days for the money to arrive and I was charged about thrice as much. I am quite happy that this service enables me to send money to my family as and when they need it.

One challenge I faced initially, while transferring money to my family, was that my family was using the mobile services of Vodafone and Airtel was not allowing money transfers to non-Airtel subscribers. Sending remittance to my family constitutes 80% of my transactions and this was a major handicap for me. Either, I had to take the services of Vodafone or my family had to take the services of Airtel. Due to this, I was not able to transfer money to them for a couple of weeks. I consulted some of my friends and they advised a workaround solution they had been using. However, I was not convinced and instead, asked my family to take Airtel connection.

I have genuinely recommended this service to my fellow workers at the construction site and taken four of them to Harpreet to sign up for the services. For this, Harpreet gave me bonus talktime on my cell phone. It is a nice incentive for sharing my experience.

I finally got free from my work at 7 pm this evening and received my daily salary. I transferred the entire amount to my family since the monthly rent was due on their house.

Though it is tough for me to survive in this salary and work condition, mobile money has surely made the journey a bit simpler and convenient.

“

I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

Like other industries, retail has its own set of unique security challenges. Loss prevention is a significant component of that challenge. The latest National Retail Security Surveystated that in 2011, U.S. retailers lost $34.5 billion to retail theft – combining employee theft, shoplifting, paperwork errors and supplier fraud. That accounted for approximately 1.4 percent of total retail sales last year.

Today, the checkout/point of sale is the nexus for retail security. Here, the four most important flows for a retailer converge – cash, inventory, electronic payments and customer data. All sorts of different security incidents and fraud can happen at this point – self-checkout fraud, shoplifting, counterfeit coupons, employee theft and compliance in theft, and the theft of customer data through compromised equipment.

As the boundaries of retailers extend beyond the traditional brick and mortar of their stores, additional security concerns come into play. There is fraud around online ordering and home shipment, portal security issues for retailer websites, supply chain security associated with contamination, theft and low quality, and even stealing intellectual property (if retailers have their own private labels).

On top of all of this, retailers are also transforming their business with emerging technologies that all have their own unique security challenges. These include new payment technologies like mobile point-of-sale and in-aisle purchasing, e-receipts, RFID and near-field communications, video and social analytics, mobility and multi-channel access and social networking.

All of these are increasing the number of contact points between the customer and the retailer – pushing out the security boundary further and further. Retailers are struggling to create a better, deeper customer experience and, at the same time, mitigate the potential risks to the organization.

The threat landscape and new technologies are creating a need for an integrated security environment. Are retailers up to the task? Are they approaching physical and information security in new, united ways? Is loss prevention being included in more and more technology conversations? Are retailers moving away from being purely reactive?

We gained a bit of insight into this as part of theIBM 2012 CISO Assessment. There were eleven retail respondents from four different countries (France, Germany, Japan and the U.S.). Their answers compared to the overall statistics from the survey shed some light on the issues:

Retailers realize that information security needs more attention – 8 of 11 see increased leadership attention from two years ago, and 9 of 11 expect increased budgets over the next two years.

They are making progress – all of the retail respondents indicated a slight (7 of 11) or a dramatic (4 of 11) improvement in their information security position from two years ago.

However, they currently don’t have the information security organizational structure to address the changing landscape – only 2 of 11 have a CISO, 2 of 11 have a budget line item, 4 of the 11 have a security or risk committee and 5 of 11 use a standard set of metrics.

Internal threats and mobility are top concerns – 6 of 11 respondents indicated mobility as their top technology concern. Internal threats were ranked the highest overall security threat with 5 of 11 ranking it #1.

Retailers will be focused on employee education and using managed services to improve their security situation over the next two years.

Another statistic that highlights the fact that retailers know the importance of information security but are struggling to address the changing technology environment comes from IBM’s Global Workforce Study. Overall, 49% of respondents stated that they have “completely addressed” their mobile security concern. For retail it was only 22%. However, 73% of retail respondents expect to make significant investments in their mobile environment in the next 1-2 years, signaling they know it is an issue.

Retailers are not only responsible for protecting their own information, but they are under considerable regulatory pressure to make sure they protect customer information as well. They are faced with a diverse array of threats and technologies that are creating new potential vulnerabilities. They need to have the right security organization and capabilities that unites information and physical security, risk, loss prevention and others into a holistic approach. Retailers realize this, but they still have a way to go before they’ll be confident in their capabilities.

Feel free to contribute to the conversation. Are these the right security challenges for retailers? Will it take more than just technology to address them? How do you think they are addressing this important issue today? Do retailers have a harder go at it than other industries because of the nature of their business? Let us know what you think.

As a former marketer myself, I know that marketing is often marginalized within enterprises, particularly those with strong scientific or development organizations. Marketing is often viewed as being responsible for the “soft stuff” that looks pretty but doesn’t have any real impact on the business. I’m here to tell you that this view is wrong, and if you don’t realize it quickly, your competitors will.

We recently surveyed 362 marketers from around the world, across more than 15 industries, and found that Leading Marketers’ enterprises had 40% greater Revenue growth and twice the Gross Profit growth over the past 3 years when compared to the rest.

What exactly is a Leading Marketer?I’m glad you asked. We identified 2 essential traits of effective marketers: “Effective Engagement” and “Intelligent Investment”. Essentially we defined Leading Marketers as those who had a high level of responsibility forengagingwith customers across channels as well as a sophisticated approach toinvestingmarketing resources.

We then looked at publicly available financial data and found that when we correlated that to our segmentation of leading marketers, a clear trend emerged: Leading Marketers’ enterprises performed better financially.

So how, exactly, do you develop a Leading Marketing organization within your enterprise? Like most things in today’s world the answer is complex but grounded in the principles of Marketing 101. It can be as simple as the 4P’s or as complicated as developing a collaborative relationship with other functional areas within the enterprise. I’ll be blogging more about this topic and other insights from our study over the coming weeks, but get a sneak preview by reading our executive report, How Leading Marketers Outperform: Effective Engagement and Intelligent Investment.

If there is a particular topic you’d like me to talk about, please login and leave me a comment, below.

There has been a great deal of recent press stating that Platform-as-a-Service (PaaS) is “the future” of cloud. With a PaaS model, the user retains control of the application data, capabilities and updates, while the provider manages the software and infrastructure beneath that application. A lot has been made of the potential value of the technology – making the entire application lifecycle more efficient and less risky, while opening the doors for new organizational constructs and increased innovation and differentiation.

In its latest cloud hype cycle, Gartner placed PaaS at the summit, stating that it will be a transformational technology in the next two to five years. However, Gartner also said that PaaS is one of the most misunderstood aspects of cloud platforms. Adam Wiggins, one of the founders of cloud application platform provider Heroku, thinks that the PaaS market is just getting started. Finally Frost & Sullivan recently reported that “the platform-as-a-service market will be the next area of keen competition for cloud innovators, as the infrastructure- and software-as-a-service spaces have been commoditized.”

All of this may be true. A lot of enterprises are just getting started experimenting with and testing PaaS implementations, and it may take a number of years for widespread adoption. Technology adoption rates are always difficult to predict, but I think we can say with certainty that PaaS is a hot topic, with great potential, and much more will be written about it.

A couple of weeks ago I wrote a blog post discussing our recent paper that links Leading Marketers with financial outperformance.In our study, these Leading Marketers had 40% higher revenue growth and twice the gross profit growth.Naturally, the next question you’d ask is “how do I become a leading marketer?”And that’s exactly what I’m going to talk about over my next few posts.

To kick things off, we found that Leading Marketers engage with their customers across a variety of channels.These leading marketers are more likely to have integrated inbound, outbound and offline marketing programs in some or all channels.They are more likely to use interaction optimization technology in all of their channels.And they are also more likely to adjust offers in real-time across all channels.In short, they create a “System of Engagement” that allows them to engage each customer as an individual, across multiple channels.

So if leading marketers are creating a system of engagement to deliver targeted messaging across channels, what specific tactics are they using?To answer that, we looked closer at mobile and social channels.

Essentially, a number of tactics within these channels can be considered “table stakes.”Everybody has a mobile version of their website and delivers mobile e-mails.Everybody has a social networking page on a site like Facebook and most engage in micro-blogging (Twitter).But there are some specific, innovative tactics where we saw differences between leading marketers and others.

When it comes to mobile, we found that leading marketers were more likely to use mobile messaging campaigns, location based targeting, and mobile-specific ads.For social, leading marketers were more likely to develop apps for 3rd party networking sites (Facebook), leverage social/local group buying (Groupon), and participate in location-based games (Foursquare).All of this means that leading marketers are faster to begin leveraging emerging/trending technologies to see if they can enhance the system of engagement.Some of these tactics may or may not prove to be effective in the long run, but the leading marketers get there first… not unlike the adage “fail fast, fail often”.By being at the forefront with these tactics, they stand to benefit when they come across something that’s especially effective.

It’s also interesting to note that location-based tactics saw greater use by leading marketers in both mobile and social.When you think about a system of engagement that strives to deliver targeted, personalized, relevant offers in real-time, it makes perfect sense that location-data is a key component to enhancing that ability.

There are a number of ideas you can take away from our data, but there’s one over-riding principle that I think is worth taking to heart:Innovation.Leading marketers aren’t afraid of trying out new channel engagement technologies or tactics.They get there first and they find out what works.They don’t worry about whether a channel is completely mature… they jump in and get their hands dirty.This enables them to be proactive with their customers, rather than reactive.

Platform as a service (PaaS) is at a critical stage in its life cycle – with promising business benefits offset by lingering reservations. PaaS promises increased flexibility, lower costs and higher quality IT services, while maintaining control over data and applications. It sits squarely between infrastructure as a service and software as a service, and could prove to be the most transformational of the three main types of cloud computing.

The IBM Center for Applied Insights wanted to explore attitudes around PaaS in order to identify leading practices in PaaS adoption and provide recommendations on how to exploit its potential. We interviewed over 1,500 IT decision makers in 18 countries and a wide range of industries so we could better understand their motivations, experiences and concerns relating to PaaS. This week, we released the results of our exploration in our latest paper “Exploring the frontiers of cloud computing – Insights from platform as a service pioneers”.

The report goes into more detail on the benefits and challenges surrounding PaaS, how to overcome the challenges and what an enterprise can do to start, or continue, their PaaS journey. For a view from cloud pioneers CLD Partners, check out their post on IBM’s Thoughts on Cloud blog. For more information about IBM’s SmartCloud Application Services launch and the study check out a recent article by ZDNet.

What is driving these shifts? In a January 28, 2012 New York Times Op-Ed piece Made in the World , Thomas Friedman argues, “Many CEOs, …increasingly see the world as a place where their products can be made anywhere through global supply chains (often assembled with nonunion-protected labor) and sold everywhere.” Globally integrated supply chains are transforming traditional business models and shifting yesterday’s outsourcing choices and trade-offs.

The transfer of control of a process, product, or service to an external provider can take a variety of forms. The value in strategic outsourcing can include an organization’s ability to:

Reduce costs

Improve services delivery

Engage in strategic partnerships that enable innovation, growth, and desired business outcomes

Traditional strategic outsourcing has often centered on transferring services to an external services provider with a focus on cost reduction. Outsourcing models are changing in new ways - why? What is driving these shifts and what can an organization do to capitalize on these changes?

Our team at the IBM Center for Applied Insights set out earlier this year to investigate market changes, identify emerging trends, and develop evidence-based research that explores how forward-thinking companies are responding to these trends.

Our premise is that the changing global dynamic, combined with technology-driven market shifts, is creating an opportunity for organizations to move beyond sourcing primarily for cost advantage to partnering for competitive advantage and desired business outcomes. Some of the technology-fueled market shifts reshaping the outsourcing landscape include:

Big data generated from multiple sources is changing how organizations make decisions and leverage predictive insights for competitive advantage

Recently, IBM conducted a survey of 97 C-Suite Sourcing executives and found that seven out of ten plan to outsource for strategic reasons like driving growth and innovation. Based on their chief motivation, we categorized these organizations as:

Cost-cutters–27 percent outsource their IT infrastructure to reduce operations costs

Innovators–36 percent outsource multiple parts of the business to enable transformation and innovation

What we found most interesting was the progression of objectives across these three groups. Cost-cutters indicate they want one primary outcome from their sourcing relationships: cost savings. The majority of growth-seekers want to reduce costs, but also faster time to market for new products and services, and increased efficiency and effectiveness across the entire value chain. Innovators expect all of the above–and more. In addition to cost reduction, speed-to-market, and value chain efficiency, the majority of innovators want providers to help them:

In my previous blog post on How Leading Marketers Outperform, I discussed how Leading Marketers develop a system of engagement that drives customer value at every touch.Today, I’m going to focus on the other side of that equation and dig a bit deeper into what prevents many marketing organizations from becoming Leading Marketers.

The first question you might ask is “why doesn’t everybody just establish a system of engagement?”The short answer is because it’s not easy.A look at the barriers both Leading Marketers and others face in implementing marketing technology is very telling.

To begin with there are a set of barriers we found that are common to virtually any technology decision: cost, ROI, and organizational structure. If we continue looking, the additional barriers for leading marketers are ease of use and lack of appropriate user skills.Alternatively, we found that some others are more concerned with alignment/collaboration within the organization – particularly with IT.In many cases, marketers may not even have ownership of marketing technology decisions.

In short leading marketers are collaborating with IT to implement the technology framework that supports a system of engagement and are focused on issues that enable them to improve the effectiveness and scale of their activities. The others are struggling to coordinate effectively with IT and other functional areas within the enterprise. They aren't at a point yet where ease of use or a lack of user skills could be a barrier.

This leads to the second question, “okay, how do you collaborate more effectively with other functional areas (especially IT)?”This is complicated, but our data suggests that Leading Marketers are able to collaborate effectively at least in part because they’ve established credibility within the organization.

There are lots of ways to establish credibility, but a part of it is being able to demonstrate the value that you bring to the table.To that end, our study found that 88% of leading marketers attribute business results to marketing activities. They use a variety of different systems, ranging from spreadsheets to complex software suites, but the common thread is that they attribute results regardless of methodology.

And of that 88%, 93% of those leading marketers have a set process in place for determining which marketing activity receives credit for the business results.Again, the specific methodology varies – first touch, last touch, results distributed across multiple touches – but they have a set process in place.

This measurement allows leading marketers to invest resources intelligently.They know what works and what doesn’t, and this allows them to maximize the impact they have on the business and focus only on the most effective activities. This in turn builds credibility with the rest of the enterprise. Marketers can finally speak in the same financial language as the rest of the business.

So in summary, it’s very difficult to become a leading marketer without measuring the results of marketing activities.Measurement not only informs operational spending decisions, but also impacts the role of marketing within the organization. Leading marketers’ ability to attribute results helps them not only invest intelligently but also build credibility and the financial justification needed to construct an enterprise-wide system of engagement.

I'll be back next time with a discussion of the overall characteristics of leading marketers and how they illustrate a road-map forward for marketing organizations. In the meantime, if you have any questions, please feel free to leave a comment!

Not many people empathize with financial markets firms these days. Yet, they are facing a one-two punch of increasingly onerous regulation combined with increased competition (a result of more demanding customers, technological change, globalization and the downturn in the global economy).

Industry experts estimate that 15-20% of the market share for wholesale and investment banking will be reshuffled in the next few years. To survive let alone thrive, financial markets firms must adapt – by changing the way that they operate.

Working with Broadridge Financial Solutions we looked into how financial markets firms are responding to this demanding environment – and specifically the changes they are making to their operating models – that is how they organize their resources, business processes, systems, information assets, etc.

The research highlighted a leading group – who excelled at both compliance and innovation. This group had five key things they were thinking and doing differently than the rest:

Thinking marketplace first, “factory” efficiencies second

Designing operations around client interactions, not vice versa

Cultivating agility – and an ability to see what others don’t

Building and use scale, but not always in expected ways

Partnering to extend their capabilities – and their thinking

These firms have a different perspective on operations and how it contributes to the business. The distinctions between front, middle and back office are becoming less distinct. As a UK-based Chief Operations Officer at a Universal Bank observed: “We must make sure changes enhance the whole process - It’s no good having a Rolls-Royce in the front and a Mini in the back.”

The leaders are looking at how operations can positively contribute to the business – through consolidation and greater efficiency of course, but also through creating the flexibility to scale resources and adapt to market conditions, facilitating faster product development and enabling innovation.

The leaders are also more open to working with external partners – and see the positive value to be gained through collaboration, for example accessing the technology and resources of an external partner. Leaders outsource more of their business processes, in particular, traditional areas like back-office accounting, settlement and clearance and reporting systems.

Success in these areas will likely encourage leaders to forge ahead into sourcing more complex functions such as reconciliations, data management, tax reporting and corporate actions. But what they outsource is perhaps of less interest than how they outsource. The leaders outsource with a business objective in mind, seeking to get the best from their partner, whereas those lagging tend to see the potential benefits in a more limited way – focusing on cutting costs of the back office.

And importantly, the study points to these differences in attitude feeding into improved results. Those who recognize how operations can contribute to the business and see collaboration as a way of improving business outcomes are rewarded with improved customer satisfaction, faster product introduction, improved regulatory compliance and improved access to information.

So what are the implications, for firms operating in financial markets as well as those in other industries who are trying to optimize the contribution of their back offices? For financial markets firms - focus on achieving agility, scalability and customer centricity, with the potential help of external partners. Many of those currently lagging are planning to evolve their operating model over the next three years. However, there is no time to delay, as the leading firms are forging ahead, and gaining market share as a result.

For those in other industries seeking to optimize their back office operations, this study also provides valuable insights. The financial markets industry is an extreme case where technological change, globalization, market turmoil, low switching costs and significant regulatory change have come together accelerating required operating model change. But the drivers are similar in many other industries – and we are observing a transformation in approaches to outsourcing – focusing more on sharing expertise and delivering business value rather than simply efficiency savings. Increasingly, the winners, across all industries, will be those who exploit these new capabilities to the full.

The study explores how enterprises are responding to the opportunities and risks introduced by new technologies.This year, we surveyed over 1,200 IT and business decision makers to determine why, when, and how their organizations adopt four pivotal emerging technologies – mobile, analytics, cloud and social business technologies – that are rapidly reshaping how enterprises operate.

Are you in the lead, or is your organization falling behind? You can use the adoption and investment statistics we discovered to help you assess where your organizationstands:

Business Analytics and Mobile Computing are already quite mainstream, with over 50% of respondents deploying.Cloud Computing and Social Business represent a coming wave, with 40% either already piloting the technologies, or planning to adopt them within two years.Moreover, planned investment levels in the four technologies over the next two years indicate that all are moving full steam ahead: 55% or more of respondents plan to increase investment in Mobile, Cloud, and Business Analytics, and 43% plan to increase their investment in Social Business. You can click on the following infographic to take a deeper dive:

Despite the foothold of these technologies and the enthusiastic investment landscape, the report cites critical IT skill gaps that threaten to slam on the brakes just as organizations are hoping to leverage these technologies for their strategic advantage:

Across all four technology areas, only roughly 1 in 10 companies report having all the skills they need to be successful, and one-quarter of respondents report major skill gaps.

We also surveyed about 700 educators and students about these technology areas, and according to their responses, the skill gap is poised to get even worse:

About one-half of academic respondents report major gaps in their institution’s ability to meet the needs of the IT workforce.

Security also continues to be a major concern. In fact, Security is rated as the #1 barrier to adoption for mobile, cloud and social business, and the #2 barrier to adoption for business analytics.

What can you learn from those making the most progress applying these technologies for strategic advantage?

We asked respondents to rate the four emerging technologies’ importance to their businesses and also to rate their enterprises’ pace of adoption relative to competitors. We identified an elite group of Pacesetters who are forging ahead faster than others – despite the adoption hurdles – and who are using emerging technologies in more strategic ways.

If you want to get your organization onto the technology fast track (or keep it there), there are a number of interesting lessons you can take from the Pacesetters. We found that Pacesetters are more likely to exhibit three distinguishing traits that help them capitalize on the potential of mobile, analytics, cloud and social technologies. They are:

More market-driven

More analytical

More experimental

So, how are Pacesetters managing to stay ahead of the competition? As it turns out, they’re very experimental in their approach to developing IT skills. Rather than wait until there’s clear business demand for new skills, Pacesetters start building skills ahead of time: they are nine times more likely to experiment with technologies that don’t yet have a clear business application, and twice as likely to proactively develop skills to meet anticipated needs.

To learn more about the study results and how you can follow the pacesetters’ lead in technology adoption, you can check out the complete IBM 2012 Tech Trends report and a variety of other resources.

Don't miss the paper's list of concrete recommendations for becoming Pacesetters. We invite you to join in the discussion and let us know what you think about the study and its recommendations!

In 2012 we saw significant data breaches across multiple industries and governments impacting millions of users. Will 2013 bring more of the same? Is this an uncertain future we will have to live with? Can we accept degraded privacy and security and billions of dollars in lost revenue, damage, reduction in brand value and remediation costs?

Last year, a number of major security themes were part of this uncertainty – cloud, mobile, social media, big data, compliance, advanced persistent threats, physical infrastructure security, and the changing nature of information security leadership. None of these issues are going anywhere. In fact, into 2013 and beyond these issues are only going to become more important and will become the concern of more and more enterprise leaders.

All of these disparate issues come together in a new infographic from IBM. It knits together the pressures CEOs are feeling to deliver transformation with limited resources, the changing role of information security leaders, the threat landscape and the best practices to address that landscape. It connects enterprise priorities with information security practices, achieving innovation while dealing with risk.

In 2012, the IBM Center for Applied Insights released a series of security-related pieces that focused on a number of these important issues. We looked at the changing role of the CISO and other security leaders in our 2012 CISO Assessment. We also published a series of best practices for security leaders through our eight article Security Essentials series. In 2013 we will continue to provide insights on information security.

What does IBM think the future of security will look like? IBM security experts and leaders have developed lists of ideas for 2013 and beyond. Highlights include:

Enterprise security organizations will become more independent and work with the audit committee and risk officers more.

Data scientists will increasingly analyze and correlate security data as well as unstructured business data to reduce the risk of breaches.

Threat data will be shared more readily between the government and private sector, and amongst private sector companies.

Organizations will begin monitoring the information shared on social media back channels to detect threats earlier.

Compliance will remain a strong security driver and will be weighed against the rise of a risk-based approach to security.

Because of data, identity and monitoring technologies, cloud security will go from "mystery and hype" to "secure and move-on".

Mobile devices (the device, network and applications) will be significantly more secure – more than laptops are today.

The type of data collected and inspected to detect advanced threats will increase in variety and volume.

Keeping these ideas, trends and emerging issues in mind, information security leaders must rise to the challenge of creating a future that isn’t like today. By using their best practices to connect with and support enterprise-level goals they can create a better, more secure, future.

Susanne Hupfer, Consultant, IBM Center for Applied Insights
Our director, Steve Rogers, recently interviewed Paul Brunet, IBM Vice President of ISVs, Start-ups, and Academic Programs, about his perspective on the 2012 Tech Trends study. Whether you're an IT or business decision-maker, an academic, or an IT practitioner, you may discover valuable insights and recommendations in their broad-ranging conversation.

IT and business leaders:
Why are CEOs regarding technology and skills as top concerns -- now outranking even market and economic forces? Why is it crucial to leverage emerging technologies for competitive advantage?
Paul discusses four technology areas -- mobile, cloud, social business, and business analytics -- and contrasts adoption and skill levels in mature and growth markets. He covers challenges to adoption -- such as security, skill gaps, and integration -- and explains why security is a business imperative. IT and business decision-makers may also be eager to learn more about the elite "pacesetter" group identified by the study, who are unlocking competitive advantage by being more market-driven, experimental, and analytical.

Academics:
How can academia better monitor the needs of the enterprise and teach relevant skills their students will need upon graduation?
Paul also examines how using sandboxes and collaborative spaces can encourage experimentation, skills development, and collaboration across universities and practitioner areas.

Practitioners:
Where should you be expanding your skills? What traits are IT leaders looking for today?

Paul and Steve talk about the importance of integrating business along with IT skills.

There are four pivotal information technologies that are rapidly reshaping how enterprises operate: mobile technology, business analytics, cloud computing, and social business. All four of these technologies are potentially disruptive, and they also come with unique security concerns. Many people fear the security implications of employees bringing their own mobile devices to work, or storing mission critical databases in public cloud environments. Fear shouldn’t drive organizations away from these potentially transformative technologies. How are organizations overcoming their fears? How are they breaking though the “security wall”?

Recently IBM released the results of its 2012 Tech Trends Report, which looks at the adoption patterns of these four technologies. It is based on a survey of over 1,200 professionals who make technology decisions – the respondents came from 16 industries and 13 countries. As part of the analysis, three different types of organizations were identified:

Pacesetters (20%) believe emerging technologies are critical to their business success and are using them to enable new operating/business models. They’re also adopting ahead of their competition.

Followers (55%) agree that these technologies are important and can provide critical capabilities and differentiation, but they generally trail Pacesetters in adoption.

Dabblers (25%) are generally behind or, at best, on par with competitors in terms of adoption. They’re less strategic in their use of emerging technologies, namely citing greater efficiency or new capabilities in selected areas.

One common thread across all three of the identified groups is that security is a significant area of importance and concern. In fact, 62% of respondents cite security as one of the three most important areas facing their organization over the next two years, with 27% rating it number one. One interesting aspect is that, the less mature an organization is with respect to the four strategic technology areas, the more security rates as an area of importance and focus. Seventy-seven percent of the Dabblers cited security as a top-three area of importance, versus only 49% of the more mature Pacesetters. Why is that? Perhaps the Dabblers don’t fully understand, or trust, that there are security technologies, policies and practices that can ensure a more secure approach overall. Or perhaps they lack the experience the Pacesetters have.

“Security and privacy are not always treated as first-order problems. Things are deployed and made widely available without regard for security and privacy. In a best-case scenario, security and privacy are thought of as add-ons. Worst case, they’re ignored completely.”
– Dr. Eugene Spafford, Professor and Executive Director of the Center for Education and Research in Information Assurance and Security, Purdue University

Besides being an area of significant importance, security is also seen as a significant barrier to technology adoption by the survey respondents. Information security is ranked as one of the top two barriers to adoption across the four technology areas – more than integration, inadequate skills or regulation and compliance. Overall, security is the biggest barrier for a majority of respondents for mobile (61%) and cloud (56%) adoption. Security is cited less often as the top adoption barrier in social (47%) and analytics (31%). As shown by the dark blue bars in the graph below, there isn’t a huge gap between the groups (9-11%) when it comes to security concerns, but, in general, less mature Dabblers see security as more of a barrier than the more mature Pacesetters. The exception is analytics, which has the lowest adoption barrier. Perhaps Pacesetters better understand the potential risks in implementing advanced analytic systems.

Another part of the security wall blocking the full realization of the benefits of the four technologies is that organizations’ current IT security policies aren’t sufficient. The figure above generally shows correlations between viewing security as a barrier to adoption (dark blue bars) and inadequate security policies (light blue bars). The Pacesetters are more confident across the board, with a majority saying that their security policies are adequate. The “adequate policies gap” between the Pacesetters and Dabblers ranges from 13% to 32%, a fairly wide margin. This tells us that organizations that have the right security policies in place are more confident, and less likely to see security as a barrier. For the others, there is a gap between their fears and taking the steps needed to address those fears.

Another tool organizations are using to attack the security wall is skills development. A majority of the respondents know that security is an issue and are working hard to boost their confidence. Overall, 70% of organizations are planning to develop or acquire skills in “mobile security and privacy” and “cloud security” – the two technology areas where security is seen as the biggest barrier.

Security is tightly intertwined with the four technology areas discussed. You shouldn’t pursue cloud, mobile, social or analytics endeavors without also focusing on needed security technologies, skills, policies and practices. The more you focus on policies and skills, the less likely you will see security as an impediment. Treat security as a business imperative and make it a priority. Design security in from the start of any project. Doing this will increase confidence and help to tear down the walls that are slowing the adoption of important, transformative technologies.

Yesterday, on Tuesday February 5, 2013, IBM CEO Ginni Rometty addressed more than 200 South African business leaders in Johannesburg. IBM has been doing business in Africa for more than 90 years. Most recently, the company has been expanding its presence by focusing investments in more than 20 African countries.

Current research suggests the top challenges African-based CIOs face today include:

Availability of skilled resources

Network and bandwith availability

Availability of liquid assets to secure investments in technology

Ensuring return on IT investment

Consistent and effective security policies

Familiarity of users and customers with new technologies

Tie to legacy environment and tools that constrains the ability to adopt new technologies

Implementation of technology standards across countries/regions

Ability to meet regulatory and compliance regulations

Stabilize and enhance IT infrastructure in support of the business

Ability to establish meaningful metrics

Improve risk management posture

Establish effective governance processes

As African-based CIOs rise to meet these challenges, should they look to the West or the East for their mentors?

To further explore how these CIOs strengthen and transform their organizations in light of these challenges, we're assessing competencies and capabilities that span:

Leadership

Business strategy and process

Business management

Risk management and compliance

Innovation and growth

Relationship management and communications

What competencies and capabilities do you see as most promising?

We look to answer these questions and several others for you when we publish our research later this year. Post a comment and contribute your opinion to the conversation!

Mobile money has progressed by leaps and bounds in the recent years and a lot of innovations are happening globally. The industry is undergoing a lot of changes and ecosystem participants are trying to learn from their successes and failures to innovate further. I have been an avid follower of the various developments happening in the industry. In this post, I will capture my thoughts on key segments of growth/developments which I would expect to happen this year. I believe these segments of growth/developments have the potential to bring further scale and innovation in this industry:

1. Development of ‘App Store’ – I expect that some of the major mobile money service providers may open up their platforms via an Application Programming Interface (APIs) that allows third parties to hook in and innovate. This development has the potential to replicate the success of the ‘Apple Appstore’ by providing an incentivized ecosystem to the developers. They would develop innovative and customized applications for specific markets which would address specific needs and in turn, attract more customers to the service. Thinking further, an ecosystem of these Apps stores from various service providers can provide further scale up and growth opportunities to them.

For example, a Kenyan MPesa customer on his visit to Ghana, can simply download an app to pay parking fees or make some quick purchases in a busy market in Ghana. Implementing platform level and customer level interoperability would be the foundation to build this big ecosystem.

2. Transformation of traditional model of B2B payments – Increasingly, mobile money is finding its application in the Retail industry for Point of Sale (PoS) transactions. Interestingly, I would expect more Business to Business (B2B) mobile money solutions to emerge for various industries. These solutions would focus on transforming the way payments are being made throughout the value chain. The aim would be to reduce risk of carrying cash, optimize liquidity, and provide delivery of goods and payments with security.

For example, Coca-Cola Sabco is looking at the use of mobile money as a way to shift the supply chain of its Manual Distribution Centers away from cash. In Papua New Guinea, IFC is looking at piloting mobile money to reduce the use of cash in the coffee supply chain.

3. Development of new business models – Traditionally a Mobile Network Operator (MNO) or a bank provides the mobile money services either individually or in collaboration. Of late, new business models are emerging as different industries are exploring mobile money based custom applications.

For example, Bharat Sanchar Nigam Limited (BSNL), a leading telecom service provider in India, has a mobile banking platform which will help mobile subscribers to send money orders electronically. The unique thing is that this SMS based service is done in association with India Post. Receiver will be able to encash the SMS at all post offices in the country. Starbucks, a leading coffee chain is already among the most successful early adopters of mobile payments, claiming to have processed USD26 million in mobile transactions in the US just 12 months after launching the service. Recently, it has forged a partnership with Square that will see the mobile payments company power in-store credit and debit card payments for Starbucks.

I expect that more of these innovative and interesting partnerships will emerge which would utilize mobile money to conduct business more efficiently and effectively.

I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

This month is the 10th anniversary of London’s congestion charge. It was not quite the first such scheme (Singapore had been running theirs for almost 10 years) but it was certainly one of the earliest internationally visible Smarter City projects before the term had even been invented. So what can we learn 10 years on from their experience?

Prevailing opinion at the time was that it was an audacious experiment. Most people expected it not to work, & certainly not to be popular. But if it was a success, it would establish London as a pioneering city, with many others in the UK and elsewhere keen to emulate it.

How wrong that opinion was! Congestion charging has been a success with remarkably few technical problems and an acquiescent, if not wildly enthusiastic, public. It had an immediate impact on traffic volumes and congestion and London is a cleaner city as a result. Yet the follow on wave of implementations has not happened. Why not?

I think the reason is in how the benefits from congestion charging are delivered and communicated to the public. The economic case for congestion charging is hard to dispute – it is cheaper to implement than road building programmes and the benefits of reduced congestion, from fewer accidents, increased mobility and fewer emissions are considerable and proven. Yet these benefits are not clearly visible to the public, who only experience the inconvenience of adapting to a new way of paying for their commute. When proposed schemes are put to the public (as they were in Manchester, Edinburgh and West London) the public voted strongly against. It takes a particular brave mayor to risk upsetting public opinion, whatever the ultimate gain to the city as a whole.

So for significant smarter city projects like congestion charging to proceed as more than vanity projects of bold mayors, more work is needed to convince the public of its benefits. There are signs that this may be happening….As technology in related areas like telematics, car to car communications, automated parking systems etc progresses, the creation of a digital city road infrastructure can be seen as an enabler to drive innovation and new business opportunities. Many governments, including the US, UK, Germany, S Korea, Japan and Singapore have identified the potential of investing in traffic management and information services to drive business investment and jobs. There is a race to lead these industries of the future. But to join the race, let alone win it, cities will need first to convince their public that it’s worth it.

I've previously written about our research of leading marketers, both their correlation with improved financial performance and what exactly they do differently than everybody else. We recently sat down with three leaders from our Enterprise Marketing Management team, Yuchun Lee, Elana Anderson, and Jay Henderson, and asked them to discuss our research and the implications of that research in more detail. Check out the video to get their take on why marketing matters, and how you can continue to engage with customers effectively and invest your marketing dollars intelligently.

Leave us a comment here or on YouTube to let us know if you're seeing similar trends in your enterprise.

The era of “Big Data” presents a variety of challenges and opportunities for marketers. With the increase in volume, velocity, and granularity of data, marketers can become much more precise in how they interact with both the marketplace and individual customers. But the same time, when you’re dealing with large volumes of data, it’s easy to over-fit your models and mistake “noise” for “signal”, to borrow a concept from Nate Silver’s excellent book, The Signal and the Noise.

This is something that we’ve been dealing with internally at IBM for a while now. In response, we’ve developed a framework internally that we think may help others refine their own approach to generating insights from data.

We call this framework “Marketing Science”. This is a 3-step framework consisting of “Architecting Data”, “Applying Science”, and “Influencing Action”. The fundamental idea is to apply the scientific method to developing insights within a business setting. This presents unique challenges in and of itself. But there are some basic concepts to keep in mind:

"Architecting" (or collecting and structuring) data is extremely important. The rest of the process depends on getting access to the right data from a variety of sources and if you haven’t done a good job of dealing with data across your enterprise, it’s like trying to run a 100m race with your shoes untied.

A hypothesis-test-refine approach to data analysis is central to the concept of Marketing Science. Developing and testing hypotheses is one of the main ways you limit your exposure to over-fitting data.

Within a business setting, insights are only valuable in so far as they’re able to inform decision-making and/or influence action. At the end of the day, driving business outcomes is the goal of Marketing Science. Keeping this in mind helps to keep you focused through the first two steps. And it means that once you’ve uncovered a nugget of insight, the real work may just be getting started as you take that insight back to the business.

Marketing Science is a fascinating topic that we’ll be talking about quite a bit more moving forward. We’ve conducted some market research that I think will be very enlightening and have started collecting some use-cases of how we’re applying these principles in a practical sense. In the meantime, if you have any comments or thoughts on developing insights from data, we’d love to hear from you.

We recently put together a nice video that provides an overview of Marketing Science. What is Marketing Science exactly? Well you can either watch the video or take a look at our Whitepaper. But the short version is that it's a way for marketers to deal with the challenges that "Big Data" presents by using a more rigorous scientifically grounded approach to develop insights and then using those insights to impact the business.

The concept itself really isn't very complicated. We've boiled it down to 3 steps: Architect Data, Apply Science, and Influence Action. However, the application of these concepts isn't always easy or straightforward. So over the coming months, I'll be posting about some of our own internal examples of applying Marketing Science to give you a better feel for what it looks like in practice.

And if your company has been engaging in Marketing Science, we'd love to hear about it. Who knows, maybe your example could be the subject of a future blog post.

In a world of increasing and varying information security threats, academic initiatives focused on cybersecurity are proliferating - yet, there is still the danger of falling short in addressing the long-term threat. To avoid becoming too focused on near-term issues, programs must be more collaborative across their own institutions, with industry, government, and among the global academic community. Only by working in concert can we meet today’s demand while educating the next generation to create a more secure future.

There have been a lot of recent reports, blog posts and news articles discussing the cybersecurity skills gap. It has been an ongoing issue for a while, and will continue into the future. We wanted to tackle this problem, not from the demand side, but from the supply side. So, the IBM Center for Applied Insights and IBM’s Cyber Security Innovation team selected 15 academic programs in 6 different countries from the over 200 institutions we monitor and work with. We conducted interviews with faculty members, department chairs and others. This week, we released a synthesis of those interviews in our latest security insights paper,“Cybersecurity education for the next generation: Advancing a collaborative approach” .

Through our interviews it was confirmed that cybersecurity is top of mind for students, educators, industry and government. Industry and government are currently facing a significant skills gap and this is causing the programs we interviewed see extremely high demand for their students, both undergraduate and graduate.

But, not all is rosy with the increased demand and attention. Programs are expected to provide more of everything – courses, graduates, opportunities, research – which has caused programs to face a number of organizational and technology challenges. Stained programs are addressing these challenges in different ways, taking different approaches to cybersecurity education, but still sharing similar common principles.

The trends, challenges, issues and differing perspectives cannot be fully addressed by each academic program on its own; cybersecurity is a global problem and should have global solutions. A set of leading practices promoting a longer-term and more collaborative approach is needed. We identified three general areas that the leading programs we talked to excelled at, all dealing with collaboration and connection.

1. Collaborate within your own institution – Cybersecurity programs should embed security practices and principles in computer science and engineering courses and take a holistic technical approach. They should work with other disciplines and schools in the university (e.g., business, law, ethics, medicine, policy). They should offer diverse education options for students and professionals (graduate, undergraduate, professional development, etc.).

2. Co-evolve with industry and government – Academic programs should have deep ties with industry and government – partnering and collaborating on research, curriculum development, and opportunities for students. A hands-on, practical, approach is also extremely important. Laboratory work, projects, special-interest groups, and internships should all be cultivated.

3. Connect across the global academic community – A number of the programs we talked with discussed the need for building a “science of security” to anticipate security problems and a cross-discipline lingua franca among scientists, engineers and policy makers. Fundamental concepts and common vocabulary can only be developed with participation of the entire global cybersecurity community.

Let’s start with some startling facts about the consumer products and goods (CPG) industry. Failure rates of new product innovations are estimated to be higher than 70 percent globally. Still, more than 80 percent of traditional marketers make decisions based on gut feel and past experiences, instead of using scientific approaches that unlock new insights (for example, advanced analytics).

Today, CPG companies are wrestling with a host of market challenges related to market, retailer and technology. Some of the significant challenges faced by the CPG companies include:

Market – Volatile commodity prices and shifts in global supply and demand increasingly influence the gross profit margins of CPG companies. Large multi-national CPG companies have global supply chains and they sell globally, hence their profit margins are affected by the cyclical movements of currencies, economies and other macro-economic factors in a country.

Retailer – The increasing clout of retailers in the marketplace poses significant challenge to the CPG companies. The big retailers are getting even bigger and more powerful. CPG companies face pressure from the retailers to reduce prices. There is a lack of collaboration/partnership with the retailers as retailers continue to limit access to consumer data and insights. CPG companies increasingly find it challenging to obtain approval from retailers for executing their plans and strategies. Maintaining retailer’s loyalty also becomes a big ongoing challenge for the CPG companies.

Technology – Keeping pace with exponential increase in data and associated analysis and technological developments has always been a challenge for the CPG companies. Companies are struggling with integrating data across channels and functions, cleaning and standardizing it and churning it with the help of advanced analytics to produce actionable insights.

These are all important challenges worthy of attention for the market participants, in order to survive and compete in the marketplace. Still, the manufacturers should start focusing on the one thing that can inform their product development, improve their operational effectiveness, increase their competitiveness and boost their profits - the consumer.

The presence of today’s technology-enabled empowered, omni-channel consumer affects how CPG companies control costs, grow sales, coordinate a wide variety of trade activities, manage time and manage the customer (retailer) relationship. These consumers are empowered by an abundance of information, technology and choices. Their expectations from the companies have increased in terms of ongoing engagement and constant experience across channels. And they can champion or sully the reputation of a brand at the click of a mouse. Their constant online and offline engagement with companies and their products generate a lot of data about their shopping behavior and preferences. That is why, manufacturers should start taking their end consumers more seriously as this knowledge can inform various functions like sales, supply chain, IT etc. across the companies (and not just marketing) and help companies transform their entire value chain. This would help them to anticipate consumer need s and proactively plan for them. This can also help them collaborate with retailers and gain a seat at the decision maker’s desk.

Many CPG companies, globally, have started to realize this need of strong consumer focus and are deploying dedicated resources and advanced analytics to develop consumer centric capabilities. For example, in its 2011 category leadership study by Kantar retail, when retailers were asked which manufacturers ranked among the top three in consumer/shopper insights and category management, Procter & Gamble (41.9%), Kraft Foods (37.1%) and PepsiCo (27.0%) came out on top, with General Mills a hair width behind (26.9%).

We, at the IBM Center for Applied Insights, have been working on a comprehensive global study of over 350 CPG senior executives to gain more quantitative and qualitative insights about the increasing consumer focus of these CPG companies. The focus of this study would be to understand market trends, the need for consumer orientation, who are the leaders, how they are doing it and the results achieved.

Watch out this space for more insights and information on the release of forthcoming executive presentation, info-graphic and white paper.

I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

Sometimes time and space conspire to create an opportunity that you weren’t expecting. That was the case for me last week. Near where I live, the University of Rhode Island (URI) hosted their third Cybersecurity Symposiumon education and workforce development. Speakers included the entire Rhode Island Congressional delegation, the director of the U.S. Defense Intelligence Agency, the CIO for the U.S. Department of Defense and a number of industry practitioners, including IBM’s VP for Cyber Security Innovation Marisa Viveros. Marisa was the co-author of the paper that we recently published on leading practices for cybersecurity education.

The symposium was open to the public and students, had over 400 attendees, and flew at a fairly high level. There were some excellent takeaways and parallels to IBM’s recent research with respect to cybersecurity skills and education. The Congressional delegation, which included Sen. Whitehouse, Sen. Reed, Rep. Langevin and Rep. Cicilline, each emphasized different areas of the cybersecurity challenge. This included improving public awareness, the national security implications of the rapidly changing cyber threat, the difficulties with law enforcement, and the need to protect our privacy, civil rights and liberties.

Lieutenant General Flynn of the U.S. Defense Intelligence Agency (and URI alum) was a very engaging speaker and talked about the “invisible war” that is currently being waged in cyberspace. He highlighted the profound transition U.S. security is currently going through – caused by population, economic and technology shifts – which require new ways of thinking. To fight this invisible war, he said that for every person currently working in cybersecurity today, we need a staggering twenty-eight more. He also repeatedly talked about the generational issues involved in cybersecurity and that real rules and discipline have yet to emerge on the international stage. He advocated something akin to the “law of the sea”, but for the cyber domain.

The business and industry panel included speakers from Google, IBM, Dell SecureWorks, CVS and Fidelity Investments and was much more open and conversational. They all brought their perspectives – whether providing information security or managing it for their organizations. There was a lot of discussion about how to break into the field of cybersecurity, what skills to have, what courses to take, and career paths. Stephan Somogyi, from Google, talked about the need to educate everyone on digital hygiene and focusing education on the basics of computer science. He said that you have to have a passion for security, it is a calling. If you have that, you can come from any field. Jeff Shilling, from Dell, talked about the incredible need for security technicians, those with hands-on skills. He has enough security managers, what he needs are those that can do the work (he agreed with Lt. Gen. Flynn’s assessment).

A lot of the themes from the day echoed what we recommended through our research. Local and national collaboration was evident with the diversity of speakers and the support from the entire university, the Congressional delegation, the military and industry. The importance of awareness was highlighted over and over. URI is working on innovative ways to provide hands-on experience for students through a low-cost Open Cyber Challenge Platform they are developing. The need for improving non-technical cybersecurity academic programs for business and policy leaders was highlighted in a new study from the Pell Center for International Relations and Public Policy.

This was a very valuable event, and I hope that it continues on an annual basis. Even though it was to raise local awareness and promote URI and its computer science program, it could stand to have increased global participation in the next iteration – which was one of our key findings.

For a summary of our recent research check out and share the Prezi presentation below:

Yesterday, we hosted a virtual livestream launch of our new Sourcing research. We’re live with exciting new research that explores how business and IT services sourcing are shifting – and the link between these shifting motivations and better business performance.

The sourcing market is changing. Clients are looking for sourcing relationships that offer higher value business outcomes in addition to cost savings. From our direct experience working with clients and general market observations, we've recognized technology shifts are accelerating the need for capabilities organizations don't have in-house.

To explore the extent of this shift – and how it is impacting organizations' sourcing motivations and strategies – we initiated a large-scale research project. Through this research, we saw distinct differences in the way that clients view outsourcing, and we uncovered a link between innovative sourcing practices and better business performance.

To better understand sourcing motivations and execution, we had three objectives for this study:

To understand how sourcing motivations are changing

To determine how sourcing strategies impact financial performance of the business

For those customers who embrace a new sourcing strategy, do they have different expectations? And, how do they structure and manage their sourcing relationships?

For the virtual panel, Rich Lechner, IBM VP of Services Marketing, served as moderator. I kicked off the discussion with an overview of study methodology and key findings. Then we were joined by the following experts:

In my previous post, I emphasized the importance of consumer focus for CPG companies. We, at the IBM Center for Applied Insights, have been working on a comprehensive global study* to gain more quantitative and qualitative insights about the increasing consumer focus of these CPG companies.

For the purpose of this study, we have segmented the market in terms of the degree of consumer focus and the use of analytics by the survey respondents. In this post, I would like to point out towards the most notable finding of the lot: existence of a “Leader” group amongst the survey respondents which enjoys much more clout with the retailers. In fact, they are nearly three times less concerned about needing a retailer’s approval to execute their plans, and 1.4 times less concerned about seeing their planning processes extended as a result of delays. They also exhibit superior financial performance over the rest. Between 2009 and 2012, the leading publicly quoted consumer products companies in our sample saw their stock prices rise 1.6 times faster than the rest (16 percent cumulative annual growth rate for Leaders compared to 10 percent cumulative annual growth rate for Others).

The companies in the Leader group use advanced analytics and collaborate extensively (both internally between functions and externally with retailers) to develop a high degree of consumer focus.

As shown in the figure 1 below, they comprise of about 15 percent of the total respondents.

The executive presentation will be delivered at the IBM Smarter Commerce event at Nashville this week.

For more details and insights on what exactly are these leaders doing differently than the rest and what steps can be taken to become one, revisit this space in a month. The Center and IBM DemandTec are authoring a complete paper on this topic, due out by the end of June.

I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

Note - For the purpose of this study, we conducted telephone interviews with 356 senior sales executives at consumer products companies in Australia, Canada, India, the United Kingdom and United States, between February, 2013 to March, 2013. These respondents cover 10 product categories. Forty-six percent of them work for large enterprises (employing 1,000 or more people), while 54 percent work for medium-sized enterprises (employing 100-999 people).

Based on changes we’re observing in the market, along with direct experience working with clients, we initiated survey research to explore the premise that outsourcing motivations have shifted, and therefore, so should sourcing execution. Traditional outsourcing was focused on cost savings – now we’re seeing a shift to sourcing for skills and expertise – cost is still important, but organizations are indicating that they’re looking for higher business value outcomes as well.

To better understand sourcing motivations and execution, we started this research with three objectives:

To understand how sourcing motivations are changing

To determine how sourcing strategies impact financial performance

For those clients who embrace a new sourcing strategy, do they have different expectations? And, how do they structure and manage their sourcing relationships?

The rise in social, mobile, cloud computing and big data is creating tremendous potential for innovation. But it’s also forcing C-suite leaders to reconsider whether their organizations have the necessary expertise to capitalize on these opportunities. Of the number of factors impacting their organizations such as market factors, regulatory concerns, globalization, environmental issues, etc, CEOs reported technology as the most important factor impacting their organizations over the next three to five years. This is forcing organizations to rethink how they operate - creating new challenges and opportunities.

Across the C-suite, we’re seeing a pattern of partnering to get the right skills and expertise to innovate faster and move the business forward.

69% of CEOs are looking to partner extensively

53% of CEOs are partnering for innovation

92% of CMOs will increase use of external partnerships for customer and data analytics

65% of growth-focused CIOs are partnering extensively to change the mix of skills, expertise and capabilities

We’re seeing a focus on looking to partner extensively, partner for innovation, and gain new skills that they haven’t had before. This shift in mindset – bringing strategic capabilities in, versus sending work out – is one reason enterprises are balking at the word “outsourcing” to describe these sourcing relationships.

To better understand the changing dynamics in business and IT services sourcing, we surveyed 1,351 sourcing decision makers from around the world. Our findings suggest that sourcing motivations are evolving beyond cost savings to include higher-order business outcomes like competitive advantage and innovation.

This sample was intentionally designed to be robust and diverse and included:

Growth and major markets

Business and IT leaders

12 countries

18 industries

C-level and key decision makers. Respondents had to indicate they played a key role in sourcing decisions for their organization to participate.

When we looked at breadth of outsourcing and primary motivation, this 2x2 segmentation model emerged:

Four partnering strategies:

Enterprise Innovators are looking to outsource broadly, and indicate a primary motivation of innovation.

Focused Optimizers are motivated to innovate, but are more narrow in their approach.

Enterprise Optimizers indicate they partner extensively, but they do outsource primarily for efficiency. They indicate they’re not yet looking to incorporate innovation in their overarching sourcing strategy.

Focused Optimizers, the largest population, partner narrowly for efficiency and effectiveness.

The y-axis explores primary motivation for outsourcing. We presented a range of options from traditional motivations focused on staff augmentation, IT or business process cost reduction, to productivity improvements achieved through standardization, automation, centralization, to innovation. We defined innovation to be aspirational - changing the way your industry works, changing the way you monetize value and redefining your company’s role in the value chain, including how you collaborate and how you operate.

For the x-axis, we looked at respondents’ current extent of outsourcing. We asked respondents whether they outsource across 80 different business processes, applications and IT functions. Using a trimmed mean analysis approach, the midpoint is 14. Those below the midpoint were categorized as sourcing in a more narrow fashion, those at or above the midpoint were categorized as sourcing broadly.

For those below the horizontal line, their primary motivation is operational efficiency or effectiveness. This includes traditional outsourcing objectives like short-term resource augmentation, cost reduction and traditional productivity improvements. Only 7% of surveyed decision makers said cost reduction and efficiency was the sole reason they outsourced IT infrastructure, applications and business processes. So while we’ll see in a future blog post that cost savings is a key business priority across the sample, it is not the sole reason for outsourcing for the majority of our respondents.

It is not enough to outsource broadly or just for innovation within a discrete process or function. It’s the combination of sourcing broadly across the enterprise for innovation that drives financial outperformance.

My next post explores the link between partnership strategy and financial performance. Log in and leave a comment!

This is the second post in a 3-part series about our new Sourcing research. My first blog post in this series looked at current outsourcing market shifts - a broader and more strategic view of sourcing relationships. Today I am exploring the financial impact of sourcing decision-making. Enterprises that source broadly across the organization and with a primary focus on innovation perform better financially – racking up 2x the revenue growth and 5x the gross profit growth compared to their peers.

An initial look at average revenue growth and gross profit growth across segments suggested a potential correlation between partnering strategy and business performance. You can see below that respondents who are both sourcing broadly and sourcing for innovation, outperform by considerable margins (as you may recall we are calling these outperformers 'Enterprise Innovators'). However, we knew that a number of other factors – such as industry, company size, geography – could be influencing these results.

We initiated analysis to help rule out firmographic characteristics as the reason for Enterprise Innovators’ outperformance. Against a slate of financial measures, each based on 3-year 2011 compound annual growth rates, Enterprise Innovators trended higher than the average of the other segments combined. This overall pattern is statistically significant. However, since this sourcing study is observational, we could not definitively conclude that Enterprise Innovators’ approach to sourcing causes better financial performance based on this correlation. To help make that case, we used an analytical technique called propensity score modeling.

Propensity score analysis matches Enterprise Innovators with other organizations in the sample that have similar firmographic characteristics, such as industry, company size and geography. In this case, we calculated propensity scores using 68 Dun & Bradstreet variables – those which showed a significant difference between Enterprise Innovators and the other segments.

Enterprise Innovators scored higher than other businesses on all financial measures even after propensity score matching, suggesting their approach to sourcing – i.e., sourcing broadly to drive innovation – was a contributing factor to this higher performance.

My next blog post in this series will look at top business priorities and partner capabilities across the sample, and then explore how Enterprise Innovators structure, scope, and govern their sourcing relationships. Please log in and leave a comment!

When you are in the business of developing (hopefully) provocative, data-driven thought leadership, every topic or issue can seem like it is undergoing rapid, fundamental transformation. Things are faster. Things are more complex. Things are being disrupted. When setting out earlier this year to take a look at how the role of finance and the CFO is changing, I had to make sure that I wasn’t going to fall into that pattern without due cause.

There are plenty of articles, reports and other quips saying that CFOs can’t just keep the books anymore. Protecting the bottom line isn’t enough. The value that they provide needs to change. Finance leaders have to be more creative, more innovative, and more strategic, yet still maintain operational discipline and efficiency.

Is this true? Are there finance leaders who are doing things differently and succeeding because of their efforts? After research, analysis, study and conversation, I have to say that this is real, and it comes down to those who can manage three areas that are accelerating concurrently and reinforcing one another.

Accelerating technological change…

With economic uncertainty and tightening business and technology cycles it is hard to stay at the cusp of change, let alone get ahead of it. A recent article on the Forbes blog, “4 Ways Technology Is Transforming Business Strategy”, does a nice job explaining why technology is disrupting strategy. Since technology (mainly IT, but also in other areas) doesn’t change in a nice linear way, it’s dramatically reducing the shelf life of business models. The pace of change is out of whack, coming in fits and spurts, and making the job of finance executives, who like things nice and predictable, very difficult. But technology is not just a challenge; it’s also an opportunity to give CFOs and other finance practitioners new tools.

Accelerating strategic change…

Traditionally a functional role, finance has always been responsible for efficient financial operations, ensuring compliance, providing trusted information and managing cash and capital. However, things are getting harder and harder with stability and predictability becoming a thing of the past when it comes to markets, competition, and customers. What can CFOs do about this strategic shift?

In the article, “Think Functionally, Act Strategically”, the author discusses how functional roles, like finance, have to change to meet accelerating strategic change. They have to balance the basic business capabilities and competitive necessities of the past with differentiating capabilities of the future. It is not just about using the current capabilities and processes of the organization anymore – CFOs have to co-create the strategy, the tools, the processes and the implementation plans with the rest of the business.

Accelerating performance…

By embracing and riding technology and strategic acceleration, CFOs can potentially unlock performance gains. We decided to go back and re-examine the results from IBM’s 2010 Global CFO Study, extend the work, and see how organizations were performing financially that were pushing their efficiency and analytical capabilities. You can read the approach and details in the report, but looking at financial measures like revenue and EBITDA, we found that those enterprises that are excelling at efficiency and insight are outperforming financially through all phases of the economic cycle. We hypothesize that this is opening them to new strategic possibilities – evolving into what we call “performance accelerators” (see graphic below).

CFOs and others in the finance function can help manage the acceleration of technology, strategy and performance. By using their current capabilities and developing new tools and processes, they can act as headlights, the gas, the breaks and the navigation system for their organization. We can’t analytically prove the existence of “performance accelerators” yet, but with further research we expect to show that strategic, growth-driven CFOs are seeing accelerating performance benefits.

I came across this Smarter Commerce video a couple of weeks ago and I really like because it gets to the core of what Smarter Commerce is and why you should care about it. If you take a few minutes to watch it, what you’ll notice is that it keeps coming back to the customer as a central theme.

And at the end of the day, that’s really what Smarter Commerce is all about. It’s taking all of that data you’re collecting, helping you develop insights about your customer and the marketplace, and then applying all of that to every aspect of your business.

We recently conducted some research on a couple of specific areas with our colleagues from IBM DemandTec. Specifically, we looked at retail merchants and CPG sales organizations. The retail merchant research was conducted in collaboration with Planet Retail and the CPG sales org research was conducted in collaboration with Kantar Retail.

As we looked at the data from these research projects, we kept coming back to the same central theme as the video above: the customer. Everybody talks about being customer-centric. It’s almost a cliché. But what we found was that while everybody talks about it, most aren’t actually doing it.

Merchants tend to be product and category oriented, and CPG sales orgs tend to focus on their customer, the retailer, rather than the end consumer. Now we’re not saying that merchants should forget about product categories or that CPG sales teams should ignore the retailer, but we found that groups that placed a strong focus on the customer (or more specifically the consumer when talking about CPG) tended to outperform those that didn’t.

These “leaders” were customer-focused and collaborative, both within their enterprises and externally with vendors and partners. And they also made much greater use of analytics to uncover insights about their customers and the marketplace. The differences were really quite striking. For example, Leading Merchants were 1.6x more likely on average to use analytics to drive merchandising decisions, while Leading CPG Sales Organizations were more than 1.7x more likely to use analytics to improve product innovation.

This is my third post in our series about research into changing sourcing strategy and execution. My first post looked at how leaders are taking a broader and more strategic view of sourcing relationships. In the second, I looked at the dramatic financial impact of sourcing decision-making (2x the revenue growth and 5x the gross profit growth compared to their peers!). Here, I’ll explore top business priorities and partner capabilities Enterprise Innovators are looking at to structure, scope, and govern these shifting sourcing relationships.

Priorities are shifting and capabilities must adapt to matchEnterprise Innovators include enterprises which put a greater focus on innovation and sourcing for a broad set of capabilities. Agility and market responsiveness are key differentiators. If they are going to get the rapid innovation and growth they seek, they need specific capabilities from their chosen partners.

Enterprise Innovators are looking for providers that can help them wherever they want to go:

Geographic specific experience and expertise

Proven physical and IT infrastructure

Flexible, integrated supply chains

Creative approaches to existing channels

Proactive ideas for new technology

Enterprise Innovators are experimenting with new business models along the way, trying to learn quickly and driving new ideas to results. If partners cannot respond, they may be left behind.

As I’ve said, these leaders are seeking a different kind of provider, in truth, a different type of relationship. To accomplish their business objectives, they recognize the need to alter the way they structure and manage their long-term alliances. Key facets of this change is outcome visibility, a focus on transformation (not just moving capabilities), and keeping all players involved in governance.

How can we see success?
Historically, service level agreements have focused on operational or cost-centric measures like system availability or cost per service desk call. But new leaders are aligning measurements with business priorities. In the financial services sector, that might mean driving uptake in mobile banking; in the telco industry, it might be lowering subscriber acquisition cost or increasing up- and cross-sell rates; or for a retailer, it might involve meeting an aggressive roll-out schedule for expansion into a new market. This shift in thinking gives rise to new vendor valuation models – ones that can help assess a provider’s contribution to broader business objectives beyond cost reduction.

Must everything change?
Enterprise Innovators are sourcing to get capabilities they need to innovate on a broad scale. So there’s a transformative bent to their sourcing relationships. Their contracts are more likely to be vertically integrated – they may include business process, applications and technology infrastructure – to enable more holistic change.

Enterprise Innovators are more likely to engage partners for specific industry or functional expertise which they can leverage to transform the roles of their employees. If their aim is marketing innovation and they’re sourcing analytics capabilities, they want their partner to do more than just provide a basic service – they want help reshaping how the marketing function works – to drive beyond understanding customer segments to understanding individual customers, from describing what’s happening to predicting what’s next.

Can we just work together?
Enterprise Innovators are pushing faster toward enterprise-wide governance. Because they’re focused on results, they recognize the need for input and collaboration across all the business units and providers involved. If the goal is accelerating the launch of new products and services, then marketing, manufacturing, distribution and sales may all need a voice in related services sourcing decisions.

This post concludes my three part series on sourcing market shifts. Want to continue the conversation? To learn more, visit our page and download the whitepaper!

Today we’re launching new research of financial services that build on findings from our global cross-industry study, Why partnering strategies matter, released in May of this year. Here, I'll explore how the financial services industry compares to our global study - where they outperform, and where they have an opportunity to improve performance.

What did we find?

The financial services sector has faced a number of challenges in recent years. A global economic crisis slowed growth and put pressure on these enterprises to creatively cut costs while also facing increased governmental compliance and regulatory requirements. Client expectations and sophistication also rose. Similar to respondents in our global study, leading financial firms began a shift in sourcing motivations and execution.

As reported in our cross-industry study, leaders that source broadly and for innovation do better financially, reporting 2x revenue growth and 5x gross profit growth compared to their peers. Financial services respondents are no different. What is different for financial services companies is increased attention on agility achieved through new business and operating models, and responding better by anticipating market shifts.

Does the financial services industry partner differently?

First, we looked at how financial services compare to global respondents across four partnering strategies. When we look at extent of outsourcing and primary sourcing motivation, we find a higher percent of Enterprise Innovators and Enterprise Optimizers in financial services. What does this mean? Respondents in financial services are at the forefront of this shift in sourcing strategy - sourcing more broadly across the organization compared to their industry peers.

Are business priorities and partner capabilities different?

Enterprise Innovators in the financial services sector are similar to leaders in other industries - putting an emphasis on agility and responsiveness to achieve desired business results. However, financial services leaders differ in three areas: their focus on enabling new business models to outperform, anticipating market shifts, and creating a culture of innovation throughout the organization. Enterprise Innovators in financial services order these priorities more than 20 percent higher than their peers in other industries.

Can these leaders do more?

Financial services organizations can do more to improve the connection between shifting sourcing motivations and execution. Enterprise Innovators in financial services are aligning their services with business outcomes, but are less likely to tie metrics to business outcomes. They are on par in transforming their scope to include a broad range of delivery models, include partners in strategy, and vertically integrate contracts across infrastructure, business processes, and applications. However, when it comes to skills, they are less likely to make the required role changes to current personnel. Finally, they are moving toward integrating governance across service providers, but can improve by implementing enterprise-wide governance.

To see our full study - ’Partnering for innovation in financial services’ and to access the global cross-industry study, visit our page.

At the IBM Center for Applied Insights, we’re always searching for new best practices to share with IBM, our clients, and the rest of the world. Which is why, at a recent team meeting, we gathered to discuss a new article from McKinsey. In “The do-or-die questions boards should ask about technology”, McKinsey outlines nine questions all boards should be posing to their company management in order to be “technology winners”. You’ll probably notice that few of these questions focus on the technology – they focus on how to get business value from the technology. These nine questions fit so well with what we try to accomplish at the Center, I thought it would be a good exercise to pull key insights from some of our studies to see how we are helping to address them:

1. How will IT change the basis of competition in our industry?

As we’ve seen in many industries, technology is radically changing the competitive landscape, allowing new companies to gain significant market share from established players. In our 2012 Tech Trends report, we segmented over 1200 respondents into 3 groups based on their organizational stance on emerging IT. What we discovered was that the leaders (Pacesetters) were ahead of their competitors in the mobile, analytics, cloud, and social business spaces. These Pacesetters believe emerging technologies are critical to their business success and are using them to enable new operating and business models to improve their competitive position.

2. What will it take to exceed our customers’ expectations in a digital world?

Customer expectations are as high as they’ve ever been - customers demand an experience that is convenient, immediate and hyper-personalized. In “Why leading marketers outperform”, we found that leading marketers deliver targeted, personalized messages to customers in real-time through channels such as social media and mobile. These marketers encourage innovation, measure every customer interaction and touch point, and collaborate regularly with IT. Compared to traditional marketers, these leaders have a three year CAGR that is more than 40 percent higher.

3. Do our business plans reflect the full potential of technology to improve our performance?

Investing in technology is expensive, but it can yield incredible returns and boost performance. We asked over 1500 IT decision-makers about their attitudes in the Platform-as-a-Service space in “Exploring the frontiers of cloud computing.” We found that the leaders, or “Pioneers”, were adopting PaaS as a way to drive innovation and improve application lifecycle across the enterprise. For these pioneers, benefits included increased resiliency, efficiency, data management integration, and optimization. According to one respondent, a VP of IT, utilizing PaaS can make a company “more nimble and cost-effective, with consistent performance and faster roll outs.” Sounds like a pretty good payoff to me.

4. Is our portfolio of technology investments aligned with opportunities and threats?

A technology portfolio must clearly reflect current opportunities and threats, change regularly, and balance short and long-term technology investments. In our Sourcing study, we looked at CEMEX, one of the world’s leading suppliers of cements, as an example of company that leveraged opportunity and minimized risks with its long-term sourcing strategy. CEMEX realized it needed to accelerate its transformation and become more agile to respond rapidly to new opportunities and threats. It engaged with a strategic sourcing provider to cut costs, improve productivity, and deliver transformative innovation. CEMEX built innovation into its sourcing contract by requiring the provider to invest annually in innovative projects that helped CEMEX achieve desired business outcomes.

5. How will IT improve our operational and strategic agility?

Across industries, customers expect new customized products and services, faster than ever before. In order to decrease time to market, companies can leverage IT to improve operational and strategic agility. We studied operations strategy decision makers from financial markets firms in “Beating market mandates: How winners are re-engineering financial markets operations” to better understand the characteristics of leading companies. The leaders in the study excel at meeting both regulatory and marketplace requirements, and typically introduce new products and services in 3 months or less. These leaders are extremely agile - focusing on improving access to analytics and reducing complexity.

6. Do we have the capabilities required to deliver value from IT?

At the Center for Applied Insights, many of our studies are about identifying and understanding the groups that get the most value from IT. Whether it’s Chief Information Security Officers who have a mature security strategy, CMOs who act as Marketing Scientists and deeply understand their customers through analytics, or CFOs who accelerate performance through analysis and prescriptive insight, we want to understand the capabilities necessary to get the best possible value from IT.

7. Who is accountable for IT and how do we hold them to account?

Who “owns” IT is becoming increasingly difficult to determine. Leading organizations have clear operating models that determine accountability for IT activities - it’s not just the CIO who is accountable anymore. In “Accelerating performance: The evolving role of the CFO”, we discuss how the CFO must contribute to the company’s IT strategy as well. This study looks back at the 2010 IBM Global CFO study, to see how the 2010 leaders are performing today. The outperformers excelled in finance efficiency and business insight, and continue to outperform financially today. However, in order for these leading CFOs to accelerate the performance of their organizations, they must now expand their influence beyond financial decisions to broader, strategic choices about business and operating models.

8. Are we comfortable with our level of IT risk?

With explosive growth in connectivity and collaboration, information technology is becoming increasingly complex and difficult to manage - managing risk from IT must be an enterprise-wide priority. In our article series “Security Essentials for CIOs”, we define an approach to manage all forms of IT risk, whether it is cybersecurity risk, IT compliance, risk to the supply chain or technology impacts to business transformation efforts.

9. Are we making the most of our technology story?

The McKinsey article could not have ended on a better question. We aim to bring stories to life - to show how leaders are building and advancing their businesses with IT. We use data to identify best practices, and communicate an IT story that addresses competition, strategy, value, performance, and risk.

Time and again, we’ve identified leaders in our studies and determined that these leaders are asking and getting answers to the nine questions above. If “digital technologies are disrupting industries,” then to be a technology winner in any industry, companies need to ask the right questions about IT strategy, and, more importantly, act on the answers they receive.

The Guardian's Media Network recently hosted a live chat around the topic of how CMOs can align and use digital marketing and data analytics - two areas we've taken a close look at since the inception of the IBM Center for Applied Insights.

The Guardian notes:

Big data (and analyzing that data) means that marketing professionals are now getting even closer to the customer – they know more about audiences than ever before, with pinpoint precision. At their fingertips a marketer now has detailed facts and figures about consumer browsing habits, their favorite brands, how they use social media. It means that campaigns can be targeted, analyzed and proved better than ever.

It becomes the job of marketers and CMOs to make sense of all that data and not get lost in the noise. Doing this, takes an analytical and curious approach to data. It's easy to find the "big numbers" but more challenging to find the "right numbers." As Surjit Chana, CMO of IBM Europe, has said, the core principles of marketing haven't changed. What has changed, dramatically, is how those principles come to life in today's marketing campaigns, customer experiences, and business results. In our paper, Marketing Science: From descriptive to prescriptive, we found that only 23% of marketing professionals use tested analytic approaches to understand the vast amount of data they have access to. More traditional marketers, using data to describe outcomes but not determine actions, consistently use data at face value - without applying data models or scientific thinking.

When technology and analytic skills don't exist in the marketing teams, it makes perfect sense to build partnerships with those who do. The closest partner in most organizations is IT. Thus, the renewed focus on CMO + CIO collaboration. We're continuing to watch, collaborate, and recommend approaches to our C-Suite colleagues. Check out "Understanding leading retailers" to see how the retail industry is collaborating with IT and partners to serve customers better.

Growing up, there was a very specific sandwich-making rule laid down by my dad. When making peanut butter and jelly sandwiches, you had to use the peanut butter before the jelly. Was this because of some principle which determined that the resulting sandwich held together better when the ingredients were applied in this order? No. It was because he hated the cross-contamination of jelly into the peanut butter jar which was inevitable when it was on the spreading knife first. He preferred jelly-free sandwiches, you see.

This memory of a long held rule, which still govern my actions today, came to me as I was reviewing the Center's current research into security related topics. We're talking with Chief Information Security Officers (CISOs) about their evolution and leading practices in the enterprise. We're discussing how they successfully bring security topics into the business world. Most importantly, we're examining how business priorities impact security choices.

In the realm of mobile and BYOD, you can hardly have a conversation without discussing security. It is a key inhibitor to mobile adoption and one reason companies are looking for managed security solutions rather than simply hoping for the best. Some security leaders argue for keeping personally owned devices out of the enterprise, simply due to the risk potential. Others, accepting that mobile is here to stay, fight to make its use as secure and safe as possible. It's only going to get worse and more and more connected devices enter the enterprise (see this recent Forbes article: "The Next Big Thing In Enterprise IT: Bring Your Own Wearable Tech?")

IBM's prior CISO, and current head of Security Services, Kris Lovejoy wrote about best practices for mobile implementations last year as part of our Security Essentials series:"Enabling mobility: their device, your data". For many, doing business means being mobile. As a security leader, it becomes your job to manage the risk - not just avoid it. Caleb Barlow extended these thoughts with an article this summer, "Yes, It’s Possible to Be Confident About Mobile Security", which focuses on four key ways to mitigate the risk of adding mobile to your secure enterprise:

Risk analysis - Organizations must understand what enterprise data is on employee devices, how it could be compromised and the potential impact of the comprise (i.e. What does it cost? What happens if the device is lost? Is the data incidental or crucial to business?).

Securing the application - In the pre-mobile, personal computer era, simply securing the device and the user were sufficient. When it comes to mobile devices, we also need to think about securing the application itself. As a typical application is downloaded from a store, the end user really has no idea who built the application, what it actually does with your data or how secure it is. Corporate applications with sensitive data need to be secure in their own right.

Secure mobile access authentication - Since mobile devices are shared, it’s important to authenticate both the user and the device before granting access and to look at the context of the user requesting access based on factors like time, network, location, device characteristics, role, etc. If the context appears to be out of line with normal behavior, appropriate counter measures can be taken.

Encryption: Simply put, if the data is sensitive it needs to be encrypted both while at rest as well as while in motion on the network.

What stops you from fully adding mobile to your security strategy? Hopefully it is more than just a distaste for jelly in your peanut butter. This October we'll have more to share on mobile adoption challenges when we release this year's follow up to our 2012 CISO Assessment.

What gap?

We hear a lot of chatter about a growing IT skills gap, both here in the US and globally. A recent New York Times article provided some statistics that were both frightening and illuminating. Approximately 20 percent of American adults don’t use the Internet at home, work, or school, and don’t own a web-enabled mobile device. While the government has funded a $7 billion effort to expand Internet access across the country, there has been little to no increase in adoption. Employment opportunities are increasingly web-based, but digital literacy rates have remained stagnant.

This gap is not only apparent in the general population, but also in the IT workforce. At the Center for Applied Insights, skills gaps often emerge in our studies as top barriers to success in specific fields. Our 2012 Tech Trends study, which surveyed more than 1200 IT professionals, found that only 1 in 10 organizations has all the skills it needs to be successful. This indicates a major gap – and when we talked to students and educators to get headlights into the future - roughly 75 percent of them report a moderate to major gap in their ability to meet the skill needs of the IT workforce. If the workforce of tomorrow and their teachers are telling us the gap is this big – clearly there’s a problem.

There is also a major skills gap in the security realm. In “Cybersecurity education for the next generation”, we addressed the need for cybersecurity-related academic programs around the world. Less than 60 percent of the students and educators surveyed believe their academic programs address the creation and development of IT security practices for emerging technologies such as Mobile, Cloud, and Social Business.

How can we close it?

Forbes, like the New York Times, wrote an article about the skills gap, emphasizing the disconnect between traditional education institutions and the current, fast-changing job market. Bottom line: institutions aren’t evolving as quickly as they should; only 42 percent of employers believe recent graduates are ready for work. Forbes’ solution? Job seekers must take it upon themselves to develop their own skills, by utilizing online resources. At the same time, companies must invest in comprehensive training programs for their diverse group of new employees, and make job requirements clearer. Noticeably absent was a suggestion for how traditional education institutions can improve. IBM has a tactic to address this. Ad Age featured a story on how IBM, in partnership with its clients, works with academic institutions to design programs that prepare students for real world IT work experience. Examples of these programs include integration with GM at Michigan State, and GlaxoSmithKline at Yale.

At the IBM Center for Applied Insights, we’ve looked at the IT skills gap from both the supply and demand sides. In terms of demand, our Tech Trends paper provides suggestions for IT leaders and practitioners on how to close this gap. For IT leaders, we suggest encouraging skill development across a range of disciplines, designing diverse teams and using social tools to assemble expertise, and extending the skills mission beyond IT, making business leaders smarter consumers of analytics. For practitioners, we suggest concentrating on integrating expertise and deepening specialized skills while broadening knowledge across new areas. Practitioners must combine areas of expertise to deliver more value, strengthen business acumen, and use social tools to solicit and supply expertise.

On the supply side, we discovered that cybersecurity education programs are entering a period of transformation. In order to work in concert with today’s demands, we suggest five key initiatives. (1) Increase awareness of security across the academic community, and produce more graduates from cybersecurity programs. (2) Treat security education as a global issue. (3) Approach security comprehensively, linking technical to non-technical fields. (4) Seek innovative ways to fund labs and pursue real-world projects. (5) Advance a “science of security”.

As technology continues to rapidly transform, skills gaps will continue to emerge. While we won’t try to tackle the 20 percent of non-Internet users in the US population, we in the Tech world have the tools to bridge the gaps in the IT workforce. We must be innovative, adaptable, and forward-thinking. What are the next skills gaps that we’ll explore? Stay tuned for more studies from the Center for Applied Insights that address this skills gap, specifically looking at IT leadership in Africa.

If your enterprise is working with Big Data, or at least beginning to stick your toe in the water, and you're not thinking about the concept of "signal", you're about to make a big mistake. Identifying the signal is what will enable you to leverage Big Data effectively. And if you don't, you're going to spend a lot of time and money chasing red herrings.

When we rely on data for decision making, what qualifies as a signal and what is merely noise? In and of themselves, data are neither. Data are merely facts. When facts are useful, they serve as signals. When they aren’t useful, data clutter the environment with distracting noise.

For data to be useful, they must:

Address something that matters

Promote understanding

Provide an opportunity for action to achieve or maintain a desired state

When any of these qualities are missing, data remain noise.

I like this definition. It fits hand in hand with the concept of Marketing Science that we proposed earlier this year. Insights (aka signal) are only valuable in so far as they drive business outcomes. And if you're developing insights that influence action within your enterprise, you had better make sure that what you're looking at is actually signal.

This is where Big Data is presents challenges. In his post, Few makes the absolutely correct point that data are noisy. And when data increase dramatically in volume, velocity, and variety (aka it gets BIG), that noisiness grows right along with everything else. All of a sudden, it becomes that much harder to correctly identify signal. As Few points out:

Finding a needle in a haystack doesn’t get easier as you’re tossing more and more hay on the pile.

If you listen to some of the discussion around Big Data, you could easily walk away thinking that if you can capture it, all you need to do is run it through some sophisticated analytic software and "boom" you've got new insights.

The problem with this approach is that pesky noise. As you start dealing with huge data sets, it becomes relatively easy to find "statistically significant noise". You may think you're looking at signal, but instead you're just finding random patterns in the noise that happen to look like signal. This is what can happen when analysts are given lots of data and told to go find something.

How do you combat this? Part of it, as Few points out, is having data analysts that have a deep understanding of how to detect signal and the associated challenges that Big Data presents. The other part, is in how you approach data analysis in the first place.

Again, I'll reference our Marketing Science framework and propose that by applying a scientific approach to data collection and analysis, you improve your ability to correctly identify signal. Instead of randomly looking for patterns in the data, by developing hypotheses and then testing and refining them, you're able to focus on signal that (a is more likely to actually be signal and b) will help drive the business forward.

We've seen some really interesting and impactful results internally with the Marketing Science framework. We've developed insights that both drive business outcomes and challenge conventional thinking. I'll be highlighting a few of these examples in future blog posts. In the meantime, I'd love to get your feedback on what challenges you've experienced with identifying signal within Big Data.

Do you know which industry is adopting analytics fastest? Do you know which industry has the biggest problem with social skills? Now you can find out.

The latest IBM Tech Trends Study surveyed over 1200 IT and business decision-makers – IT managers, business professionals and IT practitioners from 16 different industries and 13 countries – to assess how and why enterprises are adopting four emerging technologies – Mobile, Analytics, Cloud and Social Business – that are dramatically transforming how enterprises operate.

The study showed that Business Analytics and Mobile Computing represent a large swell, with over half of respondents already adopting these technologies. Cloud Computing and Social Business form a coming wave, with 40% currently piloting or planning to adopt by 2014. Furthermore, enterprises’ projected investment in the four areas is surging: 55% or more plan to increase investment in Mobile, Cloud, and Business Analytics, and 43% project increased investment in Social Business.

Despite the momentum in these areas, the study also uncovered a critical shortage of IT skills: Across all four technology areas, only about 1 in 10 companies reports having all the skills needed to be successful, and a quarter of respondents report major skill gaps.

A Deeper Dive: the Tech Trends Industry Dashboard

Today we’re launching a new interactive dashboard that allows you to explore the study findings in a dynamic way, by industry and by tech area. You can investigate adoption, investment, and skills for a particular industry within each tech area and sort to see how that industry compares to others, or to the cross-industry average.

Here’s one example. I chose Analytics, then Adoption Levels, and sorted by “Deployment” (and also clicked to “show percentages”):

We see that Insurance, Media and Entertainment, and Banking are the top three front runner industries in terms of high adoption of Analytics. Where does your industry fall?

You can also click on a particular industry name to bring up a graph specific to that industry; here we see Analytics skill levels reported by Media and Entertainment organizations:

It appears that Media and Entertainment is doing better on Analytics skills than the average: 23% have all the skills they need for Analytics, versus just 13% across all industries.

Sharing your insights

Are you successfully surfing one of the big tech waves but getting knocked down by another? Regarding your enterprise itself, do you think you’re outpacing your industry, keeping up, or lagging?

If you have particular insights about your industry’s position, please share them. All the graphs you encounter in the exploration are shareable – use the social media buttons or the embed code located beneath each graph to embed the graph within a blog, web page, or social media site. The embedded graph retains all the interactive functionality of the full dashboard.

Happy exploring – and we hope you’ll join the conversation around these findings!

In the digital era, customers’ preferences are turning into expectations. They no longer buy a product or service solely on its own merits. They also base the decision on the quality of the entire experience of selecting, obtaining and using those offerings. And, thanks to the social channels, they can make or break the reputation of a brand at the click on a mouse. As consumers, people have become more accustomed to specifying, ordering, receiving, rating and modifying products of all types, and from just about anywhere with any type of device. And now the expectations they’ve developed in the consumer marketplace are carrying over into their workplaces.

The research findings show that the need to serve a great customer experience is capturing the attention of COOs and other operations executives, whose focus is now expanding from the traditional areas of cost-saving and efficiency to actively supporting top-line growth, as well. They are aggressively acting on opportunities to differentiate their companies by providing customers with experiences that are instant, seamless and insightful.

Like everyone, Operations executives are finding themselves in an increasingly impatient world. Customers want information and service delivered at near real time or better. This means automating not only your processes, but also decisions, analytics, content, data and reporting. Operations teams are responding, and in many cases, eliminating delays by making customers part of the new processes. For example, customers are now enabled to open accounts on their own and at their leisure.

• Seamless

Despite more and more of customers’ experiences with a company being based on distinct, dispersed technologies and multiple channels, customers have come to expect each of their dealings to be easy and unified. This implies that systems, data and processes are interconnected so that each customer is served consistently across various touch points and at every interaction. The idea is to make complexity and change invisible to the customer with a seamless experience.

• Insightful

Customers expect to be served in more targeted, meaningful ways and COOs are increasingly leading the way in turning data into insights that drive revenue. Unprecedented amounts of customer and contextual data are available today, much of it containing a wealth of information capable of improving the customer experience. By bolstering analytics capabilities, enterprises can churn massive amounts of big data in near real time and use both customer and contextual data to inform their processes.

For more insights and quotes from the Operations leaders on the importance and ways of serving a great customer experience towards ensuring growth for their organizations, take a glimpse at this highly visual whitepaper

I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------*To get a first-hand perspective on how Operations leaders are addressing the challenge of serving empowered, digitally savvy customers, the IBM Center for Applied Insights conducted extensive interviews with senior executives in Healthcare, Banking/Financial Services, Insurance, Energy and Utilities, Travel and Transportation, Telecommunications, and other industries across the United States, the United Kingdom, Germany, China, Australia and Brazil.

Susanne Hupfer

Consultant, IBM Center for Applied Insights

A few months ago, the IBM Center for Applied Insights embarked on a research study to find out how and why business and IT decision-makers are using cloud. At the start of that journey, I fully expected the survey data would lead us to a primarily IT story. After all, IT departments have been turning to cloud for quite some time now to achieve scale, drive cost savings, and improve organizational efficiency. And we’ve all read articles about the cloud stack wars. So, cloud must be mainly an IT thing, neatly handled by the technology parts of the enterprise, right?

Not quite. The true picture is surprising. One worldwide survey and over 800 IT and business decision-makers and users later, the data has revealed that cloud is no longer just an IT crush. Though business is a later suitor, still lagging IT somewhat in terms of strategic interest in cloud, a change in affections is brewing: Over the next three years, cloud’s strategic importance to the business – across virtually every area, including finance, operations, sales and marketing, and product development -- is poised to double from 34 percent to 72 percent – leaping over their IT counterparts at 58 percent.

So, why is business starting to crush on cloud?

Our study has revealed that leading organizations – one of five -- have discovered a secret source of competitive differentiation through cloud and are using it as an engine for growth.

These Pacesetter organizations are building competitive advantage using Cloud in three key ways – through strategic reinvention, better decisions and deeper collaboration. In each of these areas, they’re reporting business results from their use of cloud. For example, Pacesetters are:

• 70% more likely to build new and improved business models through cloud

• 117% more likely to use cloud to make data-driven, evidence-based decisions

• 71% more likely to use cloud to collaborate across the organization and ecosystem

How are the Pacesetters getting so much out of their relationship with cloud? The study reveals all, but I’ll give you a hint: Pacesetters are leading the charge toward more comprehensive cloud strategies – they’re 270% more likely than peers to have enterprise-wide cloud strategies.

This is one case where having your head stuck in the clouds just might turn your organization into a rainmaker!

I've had the priviledge of working with IBM's Security Systems and Services teams over the past two years looking at the evolution of security leadership and what security leaders, like the CISO, are going to need to look like in the future. We’ve also looked at leading practices in cybersecurity education and we’ve identified essential security practices for CIOs based on our experiences at IBM.

Have a strategic vision… ensure global consistency in policy… engage in lots of communication with business leaders… speak business value and understand risk… minimize the impact of security to the business… be on the bleeding edge of enterprise and consumer technology...

A set of challenges also emerged from the interviews we conducted. Although we targeted more mature security leaders, they are still struggling in three areas.

How do I best manage a broad set of concerns from a diverse set of business stakeholders? Security leaders that are engaged with the business have to deal with a number of security fears from the C-Suite. The CEO might be most worried about losing customer trust because of a breach, the CFO might worry about the financial impact of recovery, COOs might focus on the impact of operational downtime. Good security leaders are able to balance, manage and allay all of these concerns.

How do I improve mobile security policy and management – not just deploy the latest technology? It’s no surprise that mobile security is top of mind. It was identified as a top technology concern in last year’s Assessment and continues to be at the forefront. Most are enabling secure mobile deployments in their organizations, but fewer have achieved comprehensive policies or strategies for personally owned devices.

How do I translate security metrics into the language of the business to help guide strategy? Technical and business metrics need to be used for more than just budget discussions and technology prioritization, they need to be deeply integrated into the decision making process of the business. To get to that point, security metrics must be translated into things the business will understand, like financial impact.

To learn more and download the full report and other materials visit the IBM Center for Applied Insights and join us in an open discussion about the future for information security leadership.

I want cloud to help me make better decisions in ______________ part of my business.

I want cloud to drive deeper collaboration across ______________.

Using their input as inspiration, an artist illustrated the crowd’s cloud wish list – which areas of the business they’re targeting for reinvention, where they’d like to drive better decisions and which types of collaboration they want to strengthen.

Given the holiday season, why not take some time to think about the gifts cloud could shower on your organization? Where could cloud enable a new business strategy? Which decisions could you improve with cloud-based analytics? Where could cloud-enabled collaboration enhance business processes and drive better results?

Then as you’re making your New Year’s resolutions for 2014, figure out how to turn this wish list into reality. As the cloud study shows, leading companies aren’t settling simply for greater efficiency from cloud; they’re using cloud to compete on a higher plane.

This week, at the annual National Retail Federation conference, “customer experience” is a hot topic. Whether they’re doing anything about it or not, retailers instinctively know experience impacts loyalty, and loyalty keeps customers buying. Forrester Research analyst Harley Manning has long argued it’s the only thing that matters. His premise: “The only source of competitive advantage is the one that can survive technology-fueled disruption: an obsession with customer experience.”

While there’s a lot of truth in Manning’s assertion, I have a corollary – one reinforced by the research we’ve done recently at the IBM Center for Applied Insights: The only way to provide a superior customer experience is with technology-fueled delivery. In other words, fight fire with fire.

Take showrooming, for example. Mobile phones have clearly disrupted the traditional shopping experience. And some retailers are still wringing their hands about sales lost from shoppers checking competitors’ prices and assortments via smart phones while in their stores. Meanwhile, other retailers are finding ways to capitalize on all those devices in shoppers’ hands – through real-time analysis of in-store shopping behavior and merging real and virtual experiences.

What will the next retail disruptor be? Will Square and Paypal do away with POS terminals? How will retailers re-imagine the cross- and up-sell process when checkout counters and wrap-stand displays disappear?

Will cognitive systems like Watson sell products and field customer service questions? What about augmented reality? Wearable technology? Rather than view emerging innovations as threats, smart retailers will see these as opportunities to improve the customer’s shopping experience.

Although Manning might consider IT “table stakes,” I disagree. Obviously, there’s a certain technology bar retailers must meet to stay relevant, but IT – executed well – can still be a differentiator when it comes to the retail customer experience. Admittedly, I’m a bit biased (given where I work). But my opinions are backed by a fair amount of evidence too.

IBM’s annual State of Marketing study – involving more than 500 organizations across 15 industries – showed companies that effectively integrate technology to influence the customer experience are outperforming financially. These leading companies are experiencing 3.4 times the net income growth – and 1.8 times the gross profit growth – of their peers. The study outlines a suite of differentiators that set these leading companies apart, but two fundamental IT capabilities stood out to me.

First, these leaders have tackled the tough job of integrating all their channels. Unlike many of their peers, they’re equipped to deliver a consistent omni-channel experience. This behind-the-scenes plumbing allows them to accomplish the second feat – adjusting those customer experiences as they happen, often based on cloud-enabled data analytics (Listen to IBM Distinguished Engineer Frank DeGilio discuss how cloud is changing the customer experience).

Through integration and contextual insights, these leaders are building the muscle mass they need to tackle technology-fueled disruption. As new possibilities emerge – even when disguised as threats – leading companies will be ready to turn the tables, using technology to reinvent the customer experience.

Forget about “out of Africa.” These days, everyone’s trying to get in – and by that I mean, get in on the explosive growth that will soon expand the continent’s consumer-facing industries by an estimated US$400 billion.

Today, we launched a new study based on a survey of 180 Africa-based IT leaders across Egypt, South Africa, Kenya, Nigeria and Morocco. We wanted to learn how these IT leaders are preparing their organizations for this huge market opportunity.

We knew – going in – that the African people are adopting new technologies as fast as, or faster than, people in other parts of the world. So, we were not surprised to find that nearly 9 out of 10 IT leaders believe emerging technologies (including mobile, cloud, analytics and social) are critical to their business success.

Strategic business leadership – Pacesetting IT leaders are better at communicating the value of emerging technology, and they’re 40 percent more likely to collaborate effectively with business peers.

IT skills development – While the majority of companies are still playing catch up and resolving skill deficits, Pacesetters are 80 percent more likely to be developing IT skills to meet future business needs.

Information security – Most African businesses say security is a top concern, but Pacesetters are taking action. They’re 30 percent more likely to be implementing new security technologies, building a risk-aware culture and investing in security skills development.

This famous quote from U.S. Supreme Court Justice Louis Brandeis extols the virtues of openness and transparency – shedding light on peoples’ actions to avert wrongdoing. In our high-tech times, organizations would be wise to apply this thinking to address “shadow IT” – employees using software-as-a-service (SaaS) applications that are procured and deployed without going through established IT channels and policies. Let’s see why.

The SaaS train has left the station, and there’s no slowing it down: global spending on SaaS is forecasted to grow at a CAGR of 20.2% in 2012-2017, reaching US$45.6 billion by 2017.

The IBM Center for Applied Insights has just released a global study of 879 IT and line-of-business (LOB) SaaS decision-makers: Champions of Software as a Service: How SaaS is fueling powerful competitive advantage. The research reveals that application agility – the ability to quickly, easily, flexibly deploy applications and implement solutions – is the number two driver for adopting SaaS (following close on the heels of reducing total cost of ownership), so it’s easy to understand why businesses find SaaS so irresistible.

The temptation is great for employees to quickly and easily deploy SaaS applications without involving the IT department to approve, provision, and secure them – but these rogue deployments can expose the organization to security risks and other negative consequences.

So, what does “sunlight” have to do with SaaS? The IBM study grouped organizations based on their level of SaaS adoption and whether they’re reporting competitive advantage from SaaS. Pacesetters are the 19% of respondents reporting the highest level of SaaS adoption and gaining competitive advantage through their broad SaaS efforts. At the low end, Chasers are much slower to adopt SaaS and gain competitive advantage from it.

Rather than deploying SaaS on the sly, pacesetting enterprises actually cultivate a strong collaboration between LOB and IT on SaaS activities such as selection, deployment, and security.

In 71% of Pacesetter organizations, LOB and IT strongly collaborate on SaaS selection and deployment, whereas only 36% of Chasers report a strong collaboration. 70% of Pacesetters report that SaaS is strengthening the IT and LOB relationship, versus only 39% of Chasers.

A strong strategy is another significant differentiator of the Pacesetters’ approach to SaaS: Compared to Chasers, more than twice as many Pacesetters have a cohesive, enterprise-wide SaaS strategy (71% versus 31%), and Pacesetters are four times more likely to position SaaS as an integral part of their enterprise cloud strategy.

The dark alleys of “shadow IT” lose their danger once one shines a strong light on them. Fostering a well-defined SaaS strategy and encouraging strong IT/LOB collaboration around SaaS are the “sunlight” that leading SaaS enterprises use to combat shadow IT.

January was a very busy month for the Center team. After wrapping up the holidays, we put the final polish on our study of African IT leaders and finished a deeper look at cloud initiatives and how software as a service plays a role. We kicked of a self-assessment on SaaS uses which we'll share later this month, along with exploring research ideas for sourcing, cloud, tech trends, mobile, and social business.

"IBM’s data and findings complement and support a position that Saugatuck has long espoused, to wit: the role(s) and attitudes/approaches of IT leaders and groups would change as SaaS / Cloud becomes more mainstream, and as it becomes more important to business success." - Information Management

“This study really helped to clarify and expose the fact that SaaS has taken center stage in companies of all sizes,” he said. “The big take away is that there is a marked difference in behaviors between the most successful companies and the rest of the pack, and that the two big drivers of business success with SaaS and cloud in general are alignment between IT and the lines-of-business and the presence of a broader cloud computing strategy.” - Armen Najarian, program director for SaaS Marketing, IBM quoted in SiliconANGLE

"When it comes to SaaS specifically, a new IBM Study released Jan. 28 found that leading enterprises—those gaining competitive advantage through broad SaaS adoption—are collaborating more effectively through social business tools." - eWEEK

February's signature experiences within IBM focus on Africa. Our study, developed with the Center for CIO Leadership, looked at how IT leaders deliver on the potential of emerging technolgies "Setting the pace in Africa." But, don't take our word on it...

“The primary reasons for not moving on adoption were a need for technology leaders to play a greater role in strategic business leadership, a lack of IT skills development across the continent, and information security concerns,” said IBM General Manager for East Africa, Nicholas Nesbitt. -Capital FM

"The survey shows that companies have found ways of empowering their IT leaders through a cultural shift as well as internal engagement between business leaders and their business peers." - All Africa

Our recent Global SaaS study revealed that organizations are not just using SaaS to reduce costs, but are actually gaining competitive advantage through their SaaS solutions. Given the promise of advantage over peers, what is holding some organizations back from broad SaaS adoption? For many, it’s security. And what outcomes are companies missing out on by not adopting SaaS? Improved collaboration, innovation, and better decision-making, to name a few. The Saas “Pacesetters” – those leading enterprises gaining competitive advantage through widespread SaaS adoption – are achieving these to a greater extent than their peers.... Read more >

The Software as a Service train has left the station, and there’s no slowing it down: global spending on SaaS is forecasted to grow at a CAGR of 20.2% in 2012-2017, reaching US$45.6 billion by 2017.

The IBM Center for Applied Insights recently released the report Champions of Software as a Service: How SaaS is fueling powerful competitive advantage, based on a global study of 879 IT and line-of-business (LOB) SaaS decision-makers. Most organizations start their SaaS journey seeking lower total cost of ownership – it’s the #1 driver for SaaS adoption, and 41% of them are achieving it to a high degree. However, the research reveals that competitive advantage is an even bigger outcome, with 47% of enterprises achieving it.

The study examined Saas “Pacesetters” – those organizations that have adopted SaaS most widely and are gaining competitive advantage through their initiatives – to see what sets them apart. These leading organizations realize better enterprise efficiency with SaaS, but they also achieve deep collaboration, better decision making, and market agility more so than their peers. What’s so special about the Pacesetters’ approach that helps them overachieve? The study found that Pacesetters take a more cohesive, enterprise-wide approach to their SaaS strategy and foster greater collaboration between IT and LOB.

How does your organization measure up to the SaaS Pacesetters? Why not take your SaaS pulse by checking out our new interactive SaaS Pulse tool… We’ll ask you nine key questions that were part of the SaaS study questionnaire and let you know how your responses measure up to the Pacesetters. If your SaaS pulse is a little weak, we’ll give you some recommendations on how to improve your SaaS fitness. Good luck!

What do you do when your insights challenge prevailing beliefs? That’s the question we faced at IBM in 2007 when a brand new forecasting tool we’d developed started spitting out projections that conflicted with our other forecasts.

Large companies, like IBM, can really struggle with pulling together complete and relevant data to create accurate forecasts. We initially developed the new forecasting tool when IBM missed an earnings target in 2005. After studying the forecasting technology we had been relying on, the Market Development and Insights team discovered that its focus on the longer term had failed to pick up on a shift in the market. That meant we had to improve the accuracy of the longer term view with some sort of early warning system to flag abrupt changes in market direction.

The new tool was designed to track over 2,000 market indicators in the G7 and BRIC countries, including oil prices, key manufacture goods and transportation, on a monthly basis. It uses correlation techniques, regression testing and principal components analysis to identify the best indicators, given the current market climate. Then it combines them to produce a forecast of the market for the next three quarters.

By 2007, our early warning system was ready to roll out to handle short term forecasting and supplement the long view.

There was just one issue: No one knew whether to trust it. Because it was forecasting that black clouds were gathering on the horizon. But our long view and all the third-party sources we used said the sky was blue.

IBM’s top management was understandably dubious of the predictions of an unproven new forecasting tool. So we decided to take the time to track economic data on our own very carefully for two quarters and compare it with forecasted findings.

The result? The alert tool was more accurate. In fact, it was so accurate that we were able to predict the recent global recession two quarters before third-party sources detected it. This six-month lead gave us time to restructure our cost base and realign our investments.

We now use a short term approach to predict the state of the hardware, software and services market by country for the next six months. We’ve also closed the loop by feeding the projections from this into the long term tools to continuously refine our long-term forecasts and monitor downside risks as well as upside opportunities.

Of course, no forecasting tool will be 100% spot on all the time. But as companies battle test and tweak the array of tools at their disposal, they get closer all the time.

Within the IBM Center for Applied Insights (CAI), I’ve begun an additional research path on enterprise mobile application development. To share and solidify my thinking, I’ll be posting some insights and early observations here.

According to the latest IBM Tech Trends study involving more than 1,200 technology decision makers, 69 percent of the respondents indicated that they increased their investments in mobility during the past year. Moreover, 63% of IT buyers say applications— with an internal or external use—are their highest priority mobility projects.

To start, I find it helpful to look at the challenges faced by those doing the work of defining the future of enterprise application development – the developers. Some of the significant challenges include managing a great user experience across devices and platforms, integrating with existing IT systems and ensuring data security. These challenges in turn are defining the capabilities and features for future mobile applications. Let’s have a closer look at just two of these challenges and new developments:

User Experience

The diversity of platforms and devices poses a unique challenge to developers. Every device company wants to be distinct, yet user-friendly. Screen sizes vary widely. New interactions, like multi-finger swipes, are added over time. New inputs, from GPS to image information, mean that expected data may or may not be available to each user. And, users work "differently" on mobile devices than they do on PCs. Developers have a significant challenge addressing the variety and scope of changes in user experience.

While the enterprises are increasingly moving towards Enterprise Mobility, in most cases the transition has either just begun or been quite slow. Many times, developers are fraught with the challenge of connecting the applications wirelessly with legacy data systems, servers and other IT systems such as cloud services. Depending on the type of data and the nature of requirement, developers need to decide whether the data needs to be downloaded on the device, for how long, how and when to update the data etc.

One company that has been successful in integrating front and back-end systems through a mobile platform is Air Canada. It developed an app to help customers check their flight status and obtain electronic boarding passes in real time. The app has had over 1.5 million downloads and was ranked number two overall in the Apple App store in Canada a week after its release. As a result, Air Canada was able to reduce its per-check-in costs by 80 percent.

Mobile application developers can address these challenges, and others, if they view them as opportunities and try to find innovative solutions to these problems. These challenges can very well become the guides/pointers towards the future course of enterprise application development.

I look forward to hearing your comments and suggestions. I’ll also have more to say in the coming weeks, as our research progresses.

Market forecasting tools can tell you how business your company is winning and your aggregate market share. But what if you want to know how much of each client’s business you’re winning?

That’s the question we at IBM set out to answer several years ago. And it’s a case study that we analyzed as part of the Center for Applied Insights study, “Marketing Science: From Descriptive to Prescriptive.” We thought that the data issues that IBM had struggled with might shed light on how other companies can use marketing science in their businesses.

In this particular instance, IBM had to figure out how we could measure our share of each company’s tech budget.

We started out on square one, figuring out which organizations we could serve. This meant identifying every company – and every one of its subsidiaries – in all the markets we operate in. Pulling together this information was a big job, but it turned out that we faced an even bigger hurdle (you can probably guess it).

We had lots of customer data: 10 terabytes, to be precise. And all of that data was sitting in different databases throughout the company, each built by individual business units over the years. And the data definitions they used varied widely. The top 164 customers alone had more than 600,000 unique identification codes. To get a coherent view of IBM’s business at the client level, we would have to reconcile millions of customer identifiers before cleaning up and consolidating the data.

A few months later, we finally had a structured database. The last step was to work out how much each customer was spending on IT.

We did this by using another forecasting tool we had developed that estimates the size of the overall market along with mathematical algorithms to assign a share of that expenditure to every company, whether they were customers or not.

It was a huge effort, and one we've refined many times since, but one that’s now paying handsome dividends. With this view, our sales and marketing teams can detect buying patterns and target holes in IBM’s market coverage. And by integrating the insights the view provides with other customer data, we can identify new opportunities. We can also explore why specific customers buy (or don’t buy) particular solutions, why some don’t spend very much with us, and what we can do to serve individual customers better.

That’s lets us anticipate and respond to our customers’ needs and allocate our resources more effectively. And we think it’s an example that demonstrates just how powerful marketing science can be within a company.

According to Gartner, the use of Software as a Service (SaaS) is expected to grow from US $18.2 billion in 2012 to US $45.6 billion in 2017. And while our recent global SaaS study found that reducing total cost of ownership (TCO) was the top driver for adopting SaaS, 47 % of IT and business respondents report that SaaS is actually transforming their businesses and providing a competitive advantage in the market.

The business benefits of SaaS are clear: lower upfront costs, flexibility and scalability. But SaaS is more than just economics, it's about market agility and innovation. On a Smarter Planet, SaaS is about helping organizations transform their businesses. SaaS solutions can help cities improve water management, help non-profits save lives, and help businesses engage and better serve their clients. Today, Marc Dietz, Director of SaaS Strategy and Marketing at IBM, and Judith Hurwitz, Hurwitz and Associates, are joining the regular #P4SP chat to discuss how SaaS can enable a Smarter Planet.

1.Today’s grads are tomorrow’s CEOs: Why cybersecurity education is so important

The fact is that information security has evolved past the purview of just cybersecurity specialists and IT experts. While, the 2013 IBM CISO Assessment called for security leaders to become more business focused. The reverse needs to happen as well. Business leaders must have a solid understanding of information security and cybersecurity issues.

2.Transforming the Healthcare industry with a foundation of information

One aspect of healthcare delivery that will revolutionize the industry over the next few years is the value-based care model. Personalized data will not only redefine the delivery of care, but moreover how it is measured and valued for payers, providers, and patients alike. As we move toward a more mature model that places the emphasis on cost, quality, and outcomes – the delivery of care will evolve simultaneously.

Cloud remains a hot topic on our IBMCAI blog. Check out and share these recent cloud posts from Leonard Lee and Susanne Hupfer.

1.Pharma excels at SaaS three-legged race

The truth is many companies are actually cultivating a strong working relationship between IT and business leaders through SaaS. To get the speed and results they’re seeking, they’ve found they need to work in tandem, much like a three-legged race. This is particularly true among leading companies, according to the IBM Global SaaS study..

What’s motivating South Africa and India to keep pumping money into cloud?

It seems they’re prepping their organizations for growth. The top reasons for adopting cloud in other geographies are: cost reduction, collaboration or workflow optimization. But in South Africa and India, cloud decision makers are motivated most by scalability. They want flexibility to expand – fast.

Africa and the Winter Olympics – two topics that aren’t often thought of together. But in Sochi this year, five athletes will be representing three African nations – Morocco, Togo and Zimbabwe. For Togo and Zimbabwe, it’s their Winter Olympic debut.

As Africa figures more prominently in the world economy, its nations are stepping onto all sorts of world stages – even some as surprising as the Winter Olympic games.

In 2014, the IBM Center for Applied Insights also had its own African debut – publishing, for the first time, research involving 180 IT leaders from six African nations, including Morocco, Egypt, South Africa, Kenya and Nigeria.

In our study, we identified a segment of African IT leaders – who like Africa’s Olympic medal hopefuls – are preparing to compete on a different plane by capitalizing on mobile, social, cloud and analytics technologies. We call them pacesetters. And they too are navigating tough courses – around challenges such as the need for greater strategic business leadership from IT leaders, IT skills development in emerging technologies, and effective information security as the use of mobile, social, cloud and analytics skyrockets.

As you watch Africa’s athletes compete at alpine and cross-country skiing this week, give some thought to the impact Africa’s businesses – and its growing middle-class – will have on our global economy.